PhosAgro is among the world leaders in the industry of chemical fertilizers and is characterized by a confident presence in the domestic and key export markets. These data are presented in the report “a Time to sow or time to reap?”, presented “alpha-Bank”.
the Company shows effective vertical integration (providing themselves the phosphate ore, 91% to satisfy their need for sulfuric acid and 90% in ammonia).
“FosAgro has access to significant ore reserves of high quality (measured by its raw materials base 2.3 billion tons of ore), mining which are more than 60 years, the report notes. — Produced Apatite concentrate (the raw material for the production of environmentally friendly phosphate fertilizers) contains more than 39% P2O5 (phosphorus oxide). Thanks to efficient integration in the mining segment, and the weakening of the ruble to the dollar, PhosAgro is well positioned on the global cost curve, while in its first quartile. Our estimate of cash costs per tonne of DAP cost about $170-180/tonne at the current exchange rate of the ruble to the dollar. The EBITDA margin of the Company according to 1К20 (first quarter 2020) amounted to 29%”.
the Authors note that currently the fertiliser producers are facing difficulties due to pandemics and major changes in the industry. Rates for phosphate and complex fertilizers are under pressure of low prices for agricultural products and raw materials and increase export-oriented production capacities among key peers.
the report Also “Alfa-Bank” says that We characterize strong balance sheet, attractive dividend policy and a well-balanced profile of growth. The company may increase shipments to key export markets through the acquisition of new trading platforms in South and North America and also in Europe, where it is concentrated about 50% of world trade in soybeans, corn and wheat. Pprivlekatelnym market is Africa, which ranked second in the world at an average annual rate of growth of demand for phosphate fertilizers (+5.3%) in 2016-2018 G.
Adding that PhosAgro is highly competitive, but its priority is the provision of fertilizer the domestic market, where the company is the leading provider.
At the recent Synergy Executive Forum CEO of PhosAgro Andrey Guryev said that over the past five years, deliveries of Russian mineral nutrient complexes domestic farmers increased by 40%. This was the result of massive investment in the development of the industry, which for the same period amounted to 800 billion rubles, of which 200 billion is accounted for PhosAgro. Over the next five years investment in the industry exceeds one trillion rubles.
“Only five months 2020 own distribution network, We ensure delivery in the field of the order of 1.5 million tons of mineral fertilizers, — said Andrey Guryev at Synergy Executive Forum. — To meet the growing demand of Russian farmers and to maintain its position in 102 countries around the world our company this year intends to produce a record amount of fertilizer — more than 10 million tons.”
however, according to the head of the company in recent years We have experienced a radical transformation, changing from a “fertilizer manufacturer” as a supplier of turnkey solutions for obtaining a “guaranteed high yield”.
the report from Alfa-Bank noted that “We have a clear investment program aimed at production growth of 25% by 2025 compared to the level of 2019 (equivalent to a production of 11.7 million tonnes in 2025). — The share of complex fertilizers NPK may exceed 55% in the framework of implementation of government investment plan (47% in 2019). The continuing growth in demand for fertilizers in the domestic market by fogrowth of investments in national food security and the growth of demand for Russian agricultural products in export markets, particularly in Asia, remain important drivers of investment ideas FosAgro”.
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