URALCHEM, OJSC Reports IFRS Financial Results for the First Nine Months of 2013 - Revenue increased to 56.26 bln RUB, compared to 55.96 bln RUB in the first nine months of 2012. - Operating profit amounted to 14.63 bln RUB, compared with 17.09 bln RUB in the first nine months of 2012. - Adjusted EBITDA comprised 17.32 bln RUB, compared to 19.55 bln RUB in the first nine months of 2012. Moscow, Russia (December 11, 2013) -- URALCHEM, OJSC (hereinafter URALCHEM Holding or the Company), the Russian holding company of the URALCHEM Group, one of the largest producers of nitrogen and phosphate fertilizers in Russia, announced its unaudited IFRS financial results for the first nine months of 2013*. The Groupâ€™s Key Financial Figures for the first nine months of 2013 and 2012 (million RUB) 9 months 2013 9 months 2012 Year-on-year change, % Revenue 56,264 55,956 1% Gross profit 29,856 32,266 -7% Gross profit margin 55% 60% Operating profit 14,625 17,094 -14% Operating profit margin 27% 32%  Net profit 10,083 18,818 -46% Net profit margin 19% 35% Adjusted EBITDA 17,315 19,550 -12% Adjusted EBITDA margin 32% 37% Cash generated from operating 13,141 14,712 -6% activities *Starting from the reporting period of the first nine months of 2013, the Group will announce consolidated financial statements of URALCHEM OSJC and its subsidiaries on a quarterly basis.
Dmitry Konyaev, CEO of URALCHEM, OJSC, commented on the Company's results for the first nine months of 2013, "In the second half of 2013 the global market situation took a downward turn for fertilizer producers. Despite the difficult market conditions,
URALCHEM maintained its revenues at the level of 2012. The Company is one of the leaders in the nitrogen segment in terms of output of ammonia per production unit. It is actively upgrading facilities, seeking to reduce costs and developing production of highmargin niche products. Thanks to its chosen strategy, URALCHEM has continued to maintain a leading position in terms of margins, with the EBITDA margin at 32%. The Company has maintained its financial stability together with its ability to develop strategic operations, as confirmed, among other things, by successive improvements of loan terms provided by banks." Financial Results Revenue for the first nine months of 2013 grew to 56.26 bln RUB, compared to 55.96 bln RUB in the first nine months of 2012. Operating profit amounted 14.63 bln RUB, or 27% of revenue, compared with the operating profit of 17.09 bln RUB, or 32% of revenue, in the first nine months of 2012. During the first nine months of 2013, adjusted EBITDA reached 17.32 bln RUB, compared to 19.78 bln RUB in the first nine months of 2012, a decrease of 12%. The adjusted EBITDA margin for the first nine months of 2013 comprised 32% of revenue compared with 37% of revenue for the same period in 2012. Markets From the beginning of the year, there was a decrease in demand for ammonia from the industrial segment in East Asia and the producers of phosphate fertilizers in India and North Africa. Demand in the US decreased because of the late start of planting. Partially the market was offset by the decrease in production in Egypt, Trinidad and Saudi Arabia. Recovery began in early August. There was a decline in exports from Ukrainian enterprises, and on the other hand, lower prices provided for growing interest in procurement. Average quotes for ammonia in January-September 2013 amounted to $498 / ton, which is only 4% lower than in the same period in 2012 (FOB Yuzhny Port). In early 2013, high seasonal demand in Europe and the United States, limited supply from Egypt, and low initial stock in the European market resulted in increased prices for urea. However, in mid-February, prices began to decline, reducing further until the end of the first half of the year. Importing countries were postponing purchases in anticipation of lower prices, while Chinese exporters were actively accumulating stock expecting the "export window". In the 2nd quarter there was a decrease in production in regions with high costs, namely in Romania and Ukraine. Amid rising purchases from India, Turkey and Latin America, there was a short period of stabilization in June. However, after then, prices continued to decline because of massive Chinese exports. Average quotes for urea in January-September 2013 amounted to $339 / ton, which is 17% lower than in the same period a year earlier (FOB The Baltic Sea). Steady growth in quotations for ammonium nitrate at the beginning of the year was replaced by a fall in mid-March. In late May, prices stabilized, helped by turnarounds at
factories in the CIS. By the end of the 2nd quarter, prices in the CIS received support from the industrial segment. During January-September 2013 quotes for ammonium nitrate averaged $291 / ton, which is 4.6 % lower than a year earlier (FOB, The Baltic Sea). Starting from late September, prices for ammonium nitrate began to recover due to reduced exports from Ukraine, as well as to the beginning of the purchase season in the domestic market of the CIS. In the phosphate fertilizers segment there was a global decline in prices due to a lack of current demand. The main reason came from India, where high levels of stock, reduction of state subsidies and depreciation of the rupee against the dollar led to a significant reduction in imports. Importers in other regions changed their procurement tactics to just satisfy the current demand, playing on the falling market. Average DAP/MAP quotes for the three quarters of 2013 fell by 14.7 % compared with the previous year, reaching $481 / ton (FOB, The Baltic Sea). Low market activity is expected until the end of the year and in the first quarter of 2014. Sales Comparative sales figures of the URALCHEM Group for the nine months of 2013-2012 (thousand tonnes): Name of product 9 months of 2013 9 months of 2012 Year-on-year change,% Ammonium nitrate and its derivatives
Other chemicals, including ammonium nitrate for industrial use
Financial Situation Cash generated from operating activities in the first nine months of 2013 amounted to 13.14 bln RUB, compared to 14.71 bln RUB in the same period of 2012. As at 30 September 2013, the Company's net debt amounted to 23.531 bln RUB. The weighted average interest rate of the loan portfolio in the first nine months of 2013 equalled 4.5% annually compared to 5.8% annually during the same period in 2012.
For more information, please visit the Company web site http://www.uralchem.com or use the following contact information: Public Relations Department URALCHEM, OJSC Tel: +7 (495) 721 89 89 Email: email@example.com Web: http://www.uralchem.com URALCHEM is one of the largest producers of nitrogen and phosphate fertilizers in Russia and the CIS with production capacities of over 2.5 million tonnes of ammonium nitrate, 2.2 million tonnes of ammonia, 0.8 million tonnes of MAP and DAP, 0.8 million tonnes of complex fertilizers and 0.5 million tonnes of urea. URALCHEM is the second largest ammonium nitrate producer in the world and number one in Russia. URALCHEM's key production assets include KirovoChepetsk Chemical Works, OJSC in Kirovo-Chepetsk, Kirov region; Azot, OJSC in Berezniki, Perm region; Voskresensk Mineral Fertilizers, OJSC in Voskresensk, Moscow region. Some of the information in this press release may contain projections or other forwardlooking statements regarding future events or the future financial performance of URALCHEM. We wish to caution you that these statements are only predictions. We do not intend to update these statements and our actual results may differ materially from those contained in our projections or forward-looking statements, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of our recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, financial risk management and the impact of general business and global economic conditions.  The decline in net profit was due to the revaluation of the Companyâ€™s share in Minudobrenia (Perm) carried out in 2012, as well as to the negative impact of the difference in exchange rates in 2013 compared with 2012 (see Appendix).
Annex to the press release about the unaudited financial results for the first half of 2013 EBITDA is a profit / loss from financial and economic activities during the reporting period, before deduction of income tax on profits, income and interest costs, depreciation and amortization. "Adjusted EBITDA" is EBITDA for the reporting period before goodwill, profit / loss from associates, profit / loss on foreign exchange differences arising on financial performance and profit / loss on operations with derivative financial instruments. Adjusted EBITDA is operating profit before depreciation and amortization and financial results of operations with derivative financial instruments. In accordance with International Financial Reporting Standards ("IFRS"), depreciation and amortization are included in cost structure, and in the selling, general and administrative expenses. IFRS does not require the disclosure and does not describe the calculation of EBITDA and adjusted
EBITDA, among other financial indicators, so they can not substitute for net profit for the period when evaluating the results of operations or the measure of cash provided by operating activities when evaluating liquidity. Approach to the calculation of EBITDA and adjusted EBITDA, as described earlier, may not coincide with the approaches used by other companies, therefore, comparability may be limited. We believe that EBITDA and adjusted EBITDA provide useful information to investors because they are indicators of the stability and efficiency of our business and our ability to fund discretionary spending such as capital expenditures, the acquisition of subsidiaries and other investments, as well as indicators of our ability to incur and service debt. IFRS classifies depreciation and amortization to operating costs, while in fact they are distributed to the current period noncash expenses for the acquisition or creation of fixed assets, incurred in previous periods, and are not affiliated with the movement of funds. Calculation of EBITDA for the first nine months of 2013 and for the first nine months of 2012 (mln RUB) 9 months of 2013 Net profit Add: Income tax Interest and other financial income Interest and other financial costs Amortisation Gain of associates Gain on change in fair value of the share in the associate Foreign exchange loss (gain) from financing activities Adjusted EBITDA
9 months of 2012
1,744.2 (558.6) 1,746.0 2,690.1 (17.9)
2,977.9 (364.9) 1,870.9 2,455.7 (12.3)
Published on Dec 12, 2013
Despite the difficult market conditions, the company maintained its revenues at the level of 2012. Thanks to its chosen strategy, URALCHEM h...