Q3 2022 Results Report
Fertiglobe Reports Q3 2022 Adj. Net Profit of $292 million; H2 2022
Dividend Guidance Announced at a Minimum of $700 million
Highlights:
Financial and Outlook
• Q3 2022 revenues increased 52% YoY to $1,318 million and adjusted EBITDA +64% YoY to $606 million, driven
by higher selling prices.
• Adjusted net profit was $292 million in Q3 2022, an increase of 84% compared to $158 million in Q3 2021.
• 9M 2022 revenues increased 87% to $3,974 million YoY, adjusted EBITDA was up 122% to $2,001 million, and
adjusted net profit increased 203% to $1,091 million compared to $360 million in 9M 2021.
• Fertiglobe generated free cash flow of $189 million in Q3 2022, after distributions to minorities of $368 million, a
237% increase versus the same period last year, and $1,499 million in 9M 2022 versus $535 million in 9M 2021.
• Our consolidated leverage position (net cash: $644 million as of 30 September 2022) supports potential growth
opportunities as well as attractive dividend payout.
• Management guides for H2 2022 dividends at a minimum of $700 million or the equivalent of AED 0.31 per share,
payable in April 2023. Fertiglobe's attractive dividend outlook is backed by its competitive position on the global
cost curve and free cash flow conversion capacity.
Abu Dhabi, UAE – 3 November 2022: Fertiglobe (ADX: FERTIGLB), the strategic partnership between ADNOC and
OCI, the world’s largest seaborne exporter of urea and ammonia combined, the largest nitrogen fertilizer producer in
the Middle East and North Africa (“MENA”) region, and an early mover in clean ammonia, today reported that its Q3
2022 revenues increased 52% to $1,318 million, while adjusted EBITDA grew 64% to $606 million compared to Q3
2021. Free cash flow increased to $189 million in Q3 2022 from $56 million in Q3 2021.
Ahmed El-Hoshy, CEO of Fertiglobe commented:
“We are pleased to report yet another solid set of results in Q3 2022, driven by a step-up in urea and ammonia prices
compared to the same period last year, supported by tight market balances, outweighing the typical seasonal slowdown
in Q3. Looking ahead, our order book in Bangladesh, Australia, and Europe is robust, as demand picks up ahead of
spring application in key import markets, giving us good visibility for Q4 and the upcoming season in H1 2023. This,
coupled with Fertiglobe’s competitive position on the global cost curve and free cash flow conversion capacity, implies
that we are well-placed to continue to return capital to shareholders, and expect H2 2022 dividends to be a minimum of
$700 million, bringing the total for the full year 2022 to a minimum of $1.45 billion, including the $750 million H1 2022
dividend paid to shareholders in October 2022.
The outlook for the fundamentals of our nitrogen end markets continues to be underpinned by tight supply, healthy farm
economics and decades low grain stocks globally, all of which incentivize the use of nitrogen fertilizers. Forward curves
continue to imply that natural gas prices in Europe are expected to remain tight, and at elevated levels through at least
2024, setting ammonia and urea breakeven pricing well above historical averages.
1Q3 2022 Results Report
At Fertiglobe, our operational excellence program continues to be at the forefront of our agenda with a sharpened focus
on utilizing our young, world-scale production assets efficiently and capturing the highest netbacks as we capitalize on
global supply chains – in partnership with OCI. Building on our position as a leading producer and the largest seaborne
exporter globally of essential nitrogen fertilizer products, we aim to fill supply gaps where possible and help in addressing
global food security concerns.
We also continue to make progress with our low-/no-carbon ammonia project pipeline, including the demonstration plant
in Egypt as a proof of concept for green hydrogen to green ammonia. We look to deliver on our hydrogen strategy while
targeting investments significantly below replacement costs and setting the stage for the leading role we aspire to play
in decarbonizing industries that make up in excess of 90% of current global greenhouse gas emissions.
As always, I would like to express my gratitude to the Fertiglobe team for working hard to deliver on our strategy and for
always putting safety first.”
Markets
Nitrogen outlook supported by crop fundamentals and tight supply dynamics
Prices are supported by several market factors which suggest a structural shift to a multi-year demand driven
environment.
i. Crop fundamentals have strengthened further, supportive of nitrogen demand to increase grain stocks:
◦
Global grain stock-to-use ratios are at the lowest levels since 2011/12 and it will likely take at least until 2024 to replenish
stocks.
◦
Disruptions to agricultural supply chains with droughts in the Northern Hemisphere are extending the tightness in the
agricultural cycle, and supportive of demand given relative nitrogen inelasticity. In the US, yields in the 2021/22 season
have been low, with the USDA estimating corn carry out at 1.2 billion bushels, 30% below the ten- year average.
◦
Farmer sentiment across grain exporting countries remains positive as input costs have been offset by higher crop prices,
incentivizing farmers to plant more acres across all crops, but particularly corn.
◦
High forward grain prices (US corn futures at $6.45 from Q4 2022 to the end of 2024 compared to $3.5 / bushel in the
last five years) are supportive of sustaining farm incomes and incentivizing demand until at least 2024 to help build grain
stocks.
ii. Nitrogen supply is expected to be structurally tighter over 2023 – 2026, resulting in an estimated market deficit
of c.7 million tons for urea and the merchant ammonia market is also structurally short:
◦
There is good visibility on new supply additions as it takes four to five years to build a greenfield plant from design to
commissioning. Further, increased environmental focus is a barrier to entry limiting grey capacity additions. Also of note,
replacement values are higher than in the last cycle of capacity additions due to inflationary pressures.
◦
In Western Europe, given high gas costs, production curtailments so far this season resulted in c. 20% y-o-y reduction
in nitrates production and larger declines for urea. At the same time, nitrogen demand destruction was minimal in the
2021/22 season (<5%), resulting in low inventories across the system. Even if most of the local production restarts,
European farmers are underserved and will be reliant on imports.
◦
Russian urea and grain exports year-to-date are higher year-over-year and trade flows have been redirected to other
markets, normalising the impact from the Ukraine conflict. Russian ammonia exports, however, are limited due to
logistical constraints and exports are down c.50% compared to last year.
◦
Urea exports from China, needed to balance the markets, are expected to remain low over the medium term, with
controls to curb exports in place at least until H2 2023 to prioritize domestic supply.
2Q3 2022 Results Report
iii. Feedstock pricing is expected to remain volatile in the short-term given weather and regulatory intervention, and
are expected to remain significantly above historical averages:
◦
European nitrogen producers are currently the marginal producer with the forward curve for natural gas implying elevated
input costs for the medium term. Gas futures in Europe indicate c.$38 / mmBtu for 2023 (6% higher y-o-y) and c.$30 /
mmBtu in 2024/25, compared to $5 / mmBtu in the 2016 to 2020 period.
◦
European winter 2022/23 gas balances appear manageable given sufficient storage and based on expectations of warm
weather. Nonetheless, European gas fundamentals are expected to be tighter in 2023 compared to 2022 given limited
Russian gas flows which cannot be made up with incremental LNG volumes, government intervention incentivising gas
consumption and higher Asian imports combined with high coal pricing setting a floor.
◦
At these higher feedstock prices, marginal costs imply ammonia support levels at >$1,300/t in 2023 and $950/t in
2024/25 (excluding CO2 costs), which is 4-6x higher than the c.$230/t support level during 2016 – 2020.
◦
Prices can drop below such floors particularly during off-season periods, but economics have historically prevailed when
margins for producers remain negative for a longer period, triggering shutdowns.
iv. Further upside is expected from the emerging incremental demand for clean ammonia in new applications
across a range of sectors including power and marine fuels, and as a hydrogen carrier
Dividends and capital structure
Fertiglobe’s dividend policy is to substantially pay out all excess free cash flows after providing for growth opportunities,
while maintaining investment grade credit ratings (S&P: BBB-, Moody’s: Baa3, Fitch: BBB-; all with stable outlooks).
Based on the current visibility on Fertiglobe's order book and its favourable positioning on the global cost curve,
management is guiding for H2 2022 dividends at a minimum of $700 million or the equivalent of AED 0.31 per share,
payable in April 2023. The exact amount of the H2 2022 dividend will be announced in February 2023 with Q4 2022
results. During calendar year 2022, Fertiglobe paid cash dividends of $1.1 billion.
Strong earnings and cash generation during the quarter resulted in a net cash position of $644 million as of 30
September 2022, compared to net debt of $487 million as at 31 December 2021 (0.3x net debt / adjusted EBITDA),
supporting future growth opportunities and an attractive dividend pay-out.
3Q3 2022 Results Report
Consolidated Financial Results at a Glance1
Financial Highlights ($ million, unless otherwise stated)
$ million unless otherwise stated Q3 2022 Q3 2021 % Δ 9M 2022 9M 2021 % Δ
Revenue 1,317.9 866.7 52% 3,974.0 2,126.7 87%
Gross profit 583.9 338.7 72% 1,919.5 780.7 146%
Gross profit margin 44.3% 39.1% 48.3% 36.7%
Adjusted EBITDA 606.3 370.7 64% 2,000.9 902.9 122%
Adjusted EBITDA margin 46.0% 42.8% 50.3% 42.5%
EBITDA 609.3 377.1 62% 1,998.9 910.4 120%
EBITDA margin 46.2% 43.5% 50.3% 42.8%
Adjusted net profit attributable to shareholders 291.5 158.2 84% 1,090.7 360.3 203%
Reported net profit attributable to shareholders 291.6 137.7 112% 1,077.6 336.2 221%
Earnings per share ($)
Basic earnings per share 0.035 0.017 106% 0.130 0.040 225%
Diluted earnings per share 0.035 0.017 106% 0.130 0.040 225%
Adjusted earnings per share 0.035 0.019 84% 0.131 0.043 205%
Earnings per share (AED)
Basic earnings per share 0.129 0.062 106% 0.477 0.147 225%
Diluted earnings per share 0.129 0.062 106% 0.477 0.147 225%
Adjusted earnings per share 0.129 0.070 84% 0.481 0.158 205%
Free cash flow 189.3 56.1 237% 1,498.8 535.0 180%
Capital expenditure 23.5 20.5 15% 47.5 34.1 39%
Of which: Maintenance Capital Expenditure 18.4 16.0 15% 38.2 28.9 32%
30 Sep 22 31 Dec 21 % Δ
Total Assets 5,979.0 5,168.5 16%
Gross Interest-Bearing Debt 1,139.1 1,385.7 (18%)
Net (Cash)/Debt (643.7) 486.6 n/m
Q3 2022 Q3 2021 % Δ 9M 2022 9M 2021 % Δ 9M 2022
Sales volumes (‘000 metric tons)
Fertiglobe Product Sold 1,364 1,396 (2%) 4,158 4,338 (4%)
Third Party Traded 336 302 11% 848 824 3%
Total Product Volumes 1,700 1,698 0% 5,006 5,163 (3%)
1 Unaudited
4Q3 2022 Results Report
Operational Highlights
Highlights:
•
12-month rolling recordable incident rate to 30 September 2022 of 0.25 incidents per 200,000 manhours.
•
Fertiglobe’s improved performance in Q3 2022 compared to Q3 2021 is due to an increase in selling prices across
its product portfolio.
•
Fertiglobe’s total own-produced sales volumes were down 2% to 1,364kt in Q3 2022 vs Q3 2021, driven by:
◦
4% increase in ammonia own-produced sales volumes to 322kt from 310kt in Q3 2021, more than offset by
◦
4% decrease in urea own-produced sales volumes of 1,042kt YoY compared to 1,086kt in Q3 2021.
•
Traded third party volumes increased 11% YoY to 336kt in Q3 2022, compared to 302kt in Q3 2021.
•
Total own-produced and traded third party volumes were relatively unchanged in Q3 2022, compared to Q3 2021.
•
In 9M 2022, Fertiglobe’s total own-produced sales volumes were down 4% to 4,158kt compared to 9M 2021,
driven by:
◦
14% decrease in ammonia own-produced sales volumes to 902kt from 1,044kt in 9M 2021, and
◦
Relatively unchanged urea own-produced sales volumes of 3,256kt.
•
Traded third party volumes were up 3% YoY to 848kt in 9M 2022.
•
Middle East ammonia and Egypt urea benchmark prices were 54% and 60% higher YoY, respectively, in Q3
2022.
Product sales volumes ('000 metric tons)
Sales volumes ('000 metric tons) Q3 2022 Q3 2021 % Δ 9M 2022 9M 2021 % Δ
Own Product
Ammonia 322 310 4% 902 1,044 (14%)
Urea 1,042 1,086 (4%) 3,256 3,295 (1%)
Total Own Product Sold 1,364 1,396 (2%) 4,158 4,338 (4%)
Third-Party Traded
Ammonia 134 40 234% 213 104 105%
Urea 202 262 (23%) 635 720 (12%)
Total Traded Third-Party Product 336 302 11% 848 824 3%
Total Own Product and Traded Third-party 1,700 1,698 0% 5,006 5,163 (3%)
5Q3 2022 Results Report
Benchmark prices1
Q3 2022 Q3 2021 % Δ 9M 2022 9M 2021 % Δ Q2 2022 % Δ
Ammonia NW Europe, FOB $/mt 1,199 654 83% 1,258 518 143% 1,240 (3%)
Ammonia Middle East, FOB $/mt 923 599 54% 1,006 498 102% 965 (4%)
Granular Urea Egypt, FOB $/mt 775 484 60% 803 413 94% 795 (3%)
Granular Urea Middle East, FOB $/mt 626 480 30% 708 401 77% 721 (13%)
Natural gas TTF (Europe) $ / mmBtu 61.0 16.7 265% 41.3 10.7 287% 30.8 98%
Natural gas Henry Hub (US) $ / mmBtu 7.9 4.3 83% 6.8 3.4 104% 8.1 (2%)
1 Source: CRU, MMSA, ICIS, Bloomberg
Operational Performance
Total own-produced sales volumes were down 2% during the third quarter of 2022 to 1,364kt compared to the same
period last year.
Ammonia and urea selling prices were significantly above prices seen in Q3 2021, with ammonia Middle East benchmark
up 54% YoY and the urea Egypt benchmark price up 60%.
The higher selling prices resulted in a 52% YoY increase in revenues to $1,318 million in Q3 2022. This translated into
a 64% increase in adjusted EBITDA to $606 million in Q3 2022 from $371 million in Q3 2021. As a result, Fertiglobe’s
adjusted EBITDA margin expanded to 46.0% in Q3 2022 from 42.8% in Q3 2021.
6Q3 2022 Results Report
Segment overview Q3 2022
Production and marketing of own
Third party trading Other Total
$ million produced volumes
Total revenues 1,020.6 297.3 - 1,317.9
Gross profit 571.0 12.9 - 583.9
Operating profit 549.5 12.9 (13.2) 549.2
Depreciation & amortization (59.7) - (0.4) (60.1)
EBITDA 609.2 12.9 (12.8) 609.3
Adjusted EBITDA 606.2 12.9 (12.8) 606.3
Segment overview Q3 2021
Production and marketing of own Third party trading Other Total
$ million produced volumes
Total revenues 705.9 160.8 - 866.7
Gross profit 338.8 (0.1) - 338.7
Operating profit 316.6 (0.1) (5.2) 311.3
Depreciation & amortization (65.5) - (0.3) (65.8)
EBITDA 382.1 (0.1) (4.9) 377.1
Adjusted EBITDA 377.5 (0.1) (6.7) 370.7
Segment overview 9M 2022
Production and marketing of own Third party trading Other Total
$ million produced volumes
Total revenues 3,286.4 687.6 - 3,974.0
Gross profit 1,908.4 16.1 (5.0) 1,919.5
Operating profit 1,841.0 16.1 (43.1) 1,814.0
Depreciation & amortization (184.1) - (0.8) (184.9)
EBITDA 2,025.1 16.1 (42.3) 1,998.9
Adjusted EBITDA 2,022.1 16.1 (37.3) 2,000.9
Segment overview 9M 2021
Production and marketing of own
Third party trading Other
$ million produced volumes Total
Total revenues 1,760.7 366.0 - 2,126.7
Gross profit 772.5 7.1 1.1 780.7
Operating profit 712.3 7.1 (11.1) 708.3
Depreciation & amortization (201.6) - (0.5) (202.1)
EBITDA 913.9 7.1 (10.6) 910.4
Adjusted EBITDA 909.3 7.1 (13.5) 902.9
7Q3 2022 Results Report
Financial Highlights
Summary results
Consolidated revenue increased by 52% to $1,318 million in the third quarter of 2022 compared to the same quarter in
2021, driven by higher prices across the board of Fertiglobe’s product portfolio.
Adjusted EBITDA grew 64% YoY to $606 million in Q3 2022 compared to $371 million in Q3 2021. Fertiglobe benefited
from higher selling prices during the quarter, which have more than offset higher profit sharing.
Q3 2022 adjusted net profit was $292 million compared to an adjusted net profit of $158 million in Q3 2021. Reported
net profit attributable to shareholders was $292 million in Q3 2022 compared to a net profit attributable to shareholders
of $138 million in Q3 2021.
Consolidated statement of income
$ million Q3 2022 Q3 2021 9M 2022 9M 2021
Net revenue 1,317.9 866.7 3,974.0 2,126.7
Cost of sales (734.0) (528.0) (2,054.5) (1,346.0)
Gross profit 583.9 338.7 1,919.5 780.7
Other income 3.0 - 3.0 -
SG&A (37.6) (27.4) (107.6) (72.4)
Other expense (0.1) - (0.9) -
Adjusted EBITDA 606.3 370.7 2,000.9 902.9
EBITDA 609.3 377.1 1,998.9 910.4
Depreciation & amortization (60.1) (65.8) (184.9) (202.1)
Operating profit 549.2 311.3 1,814.0 708.3
Interest income 0.3 0.2 1.2 0.7
Interest expense (19.7) (10.5) (61.7) (31.9)
Other finance income/(cost) (36.7) 5.8 (15.5) 10.3
Net finance costs (56.1) (4.5) (76.0) (20.9)
Net profit before tax 493.1 306.8 1,738.0 687.4
Income tax expense (73.6) (107.4) (228.3) (171.4)
Net profit 419.5 199.4 1,509.7 516.0
Non-Controlling Interest
(127.9) (61.7) (432.1) (179.8)
Net profit attributable to shareholders 291.6 137.7 1,077.6 336.2
Adjusted net profit attributable to shareholders 291.5 158.2 1,090.7 360.3
8Q3 2022 Results Report
Reconciliation to Alternative Performance Measures
Adjusted EBITDA
Adjusted EBITDA is an Alternative Performance Measure (APM) that intends to give a clear reflection of underlying
performance of Fertiglobe’s operations. The main APM adjustments at EBITDA level relate to the movement in
provisions and insurance recovery.
Reconciliation of reported operating income to adjusted EBITDA
$ million Q3 2022 Q3 2021 9M 2022 9M 2021 Adjustment in P&L
Operating profit as reported 549.2 311.3 1,814.0 708.3
Depreciation and amortization 60.1 65.8 184.9 202.1
EBITDA 609.3 377.1 1,998.9 910.4
APM adjustments for:
Movement in provisions - (6.4) 5.0 (7.5) Cost of sales
Insurance recovery (3.0) - (3.0) - Other income
Total APM adjustments (3.0) (6.4) 2.0 (7.5)
Adjusted EBITDA 606.3 370.7 2,000.9 902.9
Adjusted net profit attributable to shareholders
At the net profit level, the main APM adjustments relate to the impact on non-cash foreign exchange gains and losses
on USD exposure and other financial expenses.
Reconciliation of reported net profit to adjusted net profit
$ million Q3 2022 Q3 2021 9M 2022 9M 2021 Adjustment in P&L
Reported net profit attributable to shareholders
291.6 137.7 1,077.6 336.2
Adjustments for:
Adjustments at EBITDA level (3.0) (6.4) 2.0 (7.5)
Accelerated depreciation - - - 9.2 Depreciation
Finance income and expense
Forex loss/(gain) on USD exposure 39.4 (5.5) 6.4 (11.8)
Other financial expense 0.3 - 10.0 - Finance expense
Uncertain tax
Non-controlling interest adjustment (37.6) 32.4 (6.1) 36.4 positions/minorities
Tax effect of adjustments 0.8 - 0.8 (2.2) Taxes
Total APM adjustments at net profit level (0.1) 20.5 13.1 24.1
Adjusted net profit attributable to shareholders 291.5 158.2 1,090.7 360.3
9Q3 2022 Results Report
Free Cash Flow and Net Debt
Free cash flow before growth capex amounted to $189 million during Q3 2022, compared to $56 million during the same
period last year, reflecting performance for the quarter, offset by dividends paid to non-controlling interests, working
capital outflows and taxes.
Total cash capital expenditures including growth capex were $24 million in Q3 2022 compared to $21 million in Q3 2021.
Management continues to expect 2022 capital expenditures (excluding growth capital expenditure) to be in the range
of $120-140 million.
Reconciliation of EBITDA to Free Cash Flow and Change in Net Debt
$ million Q3 2022 Q3 2021 9M 2022 9M 2021
EBITDA 609.3 377.1 1,998.9 910.4
Working capital (50.2) (119.0) (36.6) (123.7)
Maintenance capital expenditure (18.4) (16.0) (38.2) (28.9)
Tax paid (35.9) (28.8) (169.6) (63.9)
Net interest paid (16.8) (7.9) (39.8) (26.6)
Lease payments (3.7) (4.1) (10.7) (9.8)
Dividends paid to non-controlling interests and withholding tax (368.3) (182.8) (435.6) (193.4)
Ecremage 73.3 37.6 230.4 70.9
Free Cash Flow 189.3 56.1 1,498.8 535.0
Reconciliation to change in net debt:
Growth capital expenditure (5.1) (4.5) (9.3) (5.2)
Acquisition of NCI EBIC (15% share) - (43.0) - (43.0)
Other non-operating items (3.9) - (6.8) (16.6)
Net effect of movement in exchange rates on net debt 18.7 1.3 (6.5) 1.0
Debt redemption cost - (0.9) - (0.8)
Dividend to shareholders - (130.0) (340.0) (185.0)
Advanced dividend to shareholders - (93.6) - (93.6)
Other non-cash items (0.3) - (5.9) -
Net Cash Flow / Decrease in Net Debt 198.7 (214.6) 1,130.3 191.8
10Q3 2022 Results Report
Investor and Analyst Conference Call
On 3 November 2022 at 4:00 PM UAE (12:00 PM London, 8:00 AM New York), Fertiglobe will host a conference call for
investors and analysts. To access the call please dial:
International: +44 20 3936 2999
UAE: 0800 0357 04553
UK: 020 3936 2999 / Toll free: 0800 640 6441
United States: 1 646 664 1960 / Toll Free: 1 855 9796 654
Passcode: 544922
About Fertiglobe:
Fertiglobe is the world’s largest seaborne exporter of urea and ammonia combined, and an early mover in clean
ammonia. Fertiglobe’s production capacity comprises of 6.7 million tons of urea and merchant ammonia, produced at
four subsidiaries in the UAE, Egypt and Algeria, making it the largest producer of nitrogen fertilizers in the Middle East
and North Africa (MENA), and benefits from direct access to six key ports and distribution hubs
on the Mediterranean Sea, Red Sea, and the Arab Gulf. Headquartered in Abu Dhabi and incorporated in Abu Dhabi
Global Market (ADGM), Fertiglobe employs more than 2,600 employees and was formed as a strategic partnership
between OCI N.V. (“OCI”) and the Abu Dhabi National Oil Company (“ADNOC”). Fertiglobe is listed on the Abu Dhabi
Securities Exchange (“ADX”) under the symbol “FERTIGLB” and ISIN “AEF000901015. To find out more,
visit:www.fertiglobe.com.
For additional information, contact:
Fertiglobe Investor Relations: For additional information on Fertiglobe:
Rita Guindy www.fertiglobe.com
Director
Email: rita.guindy@fertiglobe.com
Hans Zayed
Director
Email: hans.zayed@fertiglobe.com
Investor.relations@fertiglobe.com
11

Sentiment: positive