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November 04, 2019

PhosAgro - Strategy: new targets for growth and sustainability

PhosAgro announced its 2025 production targets. The company said its 2020 strategy targets were achieved ahead of schedule. The output of phosphate rock to reach 10.5mt and fertilizer production to hit 9.5mt in 2019, up 36% and 61% respectively from 2013 levels. The company has completed the construction of ammonia and sulphuric acid units, reducing feedstock purchases from third parties, and improving self-sufficiency. We update our forecasts based on new strategic targets.

Date: 4/11/2019

October 01, 2019

Fertiliser sector outlook - September 2019

The August and September soft commodities price performance was driven by USDA reports. Crop prices declined on August USDA WASDE reports; however, the September USDA report came supportive for soft commodities and fertiliser stock prices. Several fertiliser producers announced the production cuts.

August 06, 2019

The Mosaic Company - 2Q19 results review

The Mosaic Company posted weak 2Q19 financials following the worst spring planting season in the US. The company said that unprecedented wet weather in the Midwest United States has negatively impacted sales volumes and phosphate margins, however higher grain prices provide opportunities in fall 2019 and beyond. The adverse weather in the US and higher imports volumes from China negatively affected the phosphate market, while potash and Mosaic Fertilizantes in Brazil continue to perform well, according to Mosaic.

August 01, 2019

Fertiliser sector outlook - July 2019

The earnings season revealed a good financial performance of fertiliser producers despite challenging weather conditions in the US in 1H19. Lower energy costs and higher nitrogen prices were supportive for the sector players.

July 04, 2019

Fertiliser sector outlook - June 2019

In June 2019, fertiliser stock prices were climbing on the back of stable nitrogen and potash price environment and strategy update from the world largest fertiliser player Nutrien. Soft commodity prices, including corn and wheat quotations, were strong during May and the first half of June 2019, following May crop update.

May 02, 2019

Fertiliser sector outlook - April 2019

Phosphate prices stay slightly lower in April compared to March levels. DAP Tampa prices were down 0.3% MoM and down 7.1% YoY as of the end of April 2019. Mosaic announced about the idling of its Brazilian mine due to a new regulation, stating, however, that it has enough inventory. Potash prices stay flat MoM and some 16% higher YoY. Granulated urea price is up 2.7% MoM in April 2019. 

April 01, 2019

Fertiliser sector update - March 2019

A weakness of the fertiliser prices during the high season resulted in a negative performance of fertiliser stocks. Phosphate producers Mosaic and PhosAgro were under pressure since the beginning of the year. Mosaic announced about production reduction by 300kt during the season; however, the company expects DAP price increase in 2Q19.

March 01, 2019

Fertiliser sector outlook - February 2019

We review the valuations and price environment of fertilizer companies. 

January 18, 2019

Fertiliser sector outlook - January 2019

Fertiliser stocks were on the green territory with Intrepid Potash, SQM, K+S stocks showed some rebound over the last month. Chinese phosphate imports growth concerns negatively affected Mosaic performance.

November 20, 2018

The Mosaic Company update

The Mosaic Company reported strong operating and financial results in 3Q18. The adjusted EBITDA reached $1.4bn, up 71% YoY in 9M18. The net earnings were $247mn in 3Q18 and $358mn in 9M18. The company reported adjusted EPS of $0.75 in 3Q18, and $1.35 in 9M18, up 78% YoY. The debt paid down was $700mn as of 30 September 2018 including $400mn in 3Q18, ahead of the company’s goal. All three main segments of Mosaic’s business reported good operating and financial performance.

November 07, 2018

Fertiliser sector update - October 2018

The earnings season proved favorable expectations for the second half of the year. The positive price environment in 3Q18 and tight demand/supply in the nitrogen segment resulted in good operating and financial figures of fertilizer majors. Nutrien reported the retail EBITDA increase of 10% YoY in 3Q18, potash EBITDA increase of 64% YoY, and nitrogen sector EBITDA increase of more than twice YoY in 3Q18. However, the company’s $1.8bn impairment due to closure of a New Brunswick potash facility resulted $1.1bn net loss in 3Q18. Mosaic reported strong operating cash flow, driven by sales increase to $2.9bn in 3Q18 from $2.0bn in 3Q17 due to the integration of Mosaic Fertiliantes. The Mosaic’s adjusted EBITDA was $1.4bn, up 71% YoY in 9M18. Yara reported net income after non-controlling interests of $98mn ($158mn adjusted for foreign currency translation) in 3Q18 compared to $90mn ($112mn) in 3Q17. Yara’s 16% improvement in EBITDA was due to higher sales prices, which offset the energy cost growth. ICL reported net income of $134mn in 3Q18 compared to $115mn a year ago and announced a 3-year contract signed with Chinese customers for 3mt of potash delivery. Producers increased their FY2018 financial guidance.

October 08, 2018

Fertilisers: Sector outlook - September 2018

The fertilizer sector demonstrated a robust performance over the last three months. The favorable fertilizer price environment and supportive crop statistics resulted in some 5-10% fertilizer stocks performance since the beginning of September. The 2Q18 earnings season came with reported revenue increase by most of the fertilizer majors. Nutrien, Mosaic, and PhosAgro showed over 10% revenue and operating income growth driven by higher YoY sales volumes and product prices.  Nutrien and Mosaic increased their FY18 EBITDA guidance. Yara met higher production costs and foreign exchange differences that resulted in a weaker net result. K+S announced about EBITDA FY18 down correction on the back of drought and production decline in 3Q18.

August 05, 2018

Nutrien: 2Q2018 results review

Nutrien reported strong operating results for 2Q2018. The company’s sales reached $8,145mn in 2Q18, up from $7,348mn combined Agrium&PotashCorp result a year ago. Cost of goods sold were down $477mn to $5,800mn, while gross margin rose $340mn to $2,131mn. The company reported net earnings from continuing operations at $741mn, up $36mn YoY in 2Q2018. Retail segment sales were $6,342mn, up $635mn YoY. The company achieved a record EBITDA in the Retail segment at $886mn, up 10% YoY on the back of strong seed and crop protection product margins and good demand for crop inputs.Nutrien reported strong operating results for 2Q2018. The company’s sales reached $8,145mn in 2Q18, up from $7,348mn combined Agrium&PotashCorp result a year ago. Retail segment sales were $6,342mn, up $635mn YoY. The company achieved a record EBITDA in the Retail segment at $886mn, up 10% YoY on the back of strong seed and crop protection product margins and good demand for crop inputs.

July 03, 2018

Fertilisers: Sector outlook - June 2018

The sector news flow remained positive last month with only few exceptions. The price environment and soft commodity market news were generally positive for the sector. Stable phosphate fertilizer prices and declining YoY Chinese exports, as well as tightening nitrogen market balance were supportive for major stocks, including Mosaic, Nutrien and CF Industries.

June 04, 2018

Fertilisers: Sector outlook - May 2018

The fertilizer majors reported weak 1Q18. The earnings season revealed the weak operating performance of largest fertilizer producers due to the late spring and other weather issues. The results were already priced in. Fertiliser companies made more favorable projections for the second quarter. The last month performance reflected better prospects of Nutrien (+10.8%), CF Industries (+4.7%), and Mosaic (+3%).

May 03, 2018

Fertilisers: Sector outlook - April 2018

The fertilizer stock prices recovered in April after the March losses. The earnings season announcements reported a decline of China’s urea exports, and lower 2017/18 world grain forecast by USDA in April are supportive for the fertilizer stock universe.

April 02, 2018

Fertilisers: Sector outlook - March 2018

The fertilizer stock prices were weak during March’18, reflecting risks of Chinese-USA trade tariffs and weaker seasonal demand.

January 04, 2018

Nutrien: Time to gather stones

Nutrien was created as a result of the merger of PotashCorp and Agrium. The company will be the largest global player in the potash market with 22.6mt KCl capacity compared to the 62-64mt estimated demand for 2018. Nutrien will operate 7.7mt of ammonia capacity and 4.2mt of phosphate capacity that will bring its nutrient capacity to over 34mt per year. The fertiliser production may reach approximately 25mt per year in the current market environment. The company will operate the largest farm retail network with over 1,500 locations globally and annual sales of over $12bn. The retail operations, according to estimates provided by the company, made the biggest contribution to the EBITDA in 3Q17 LTM (35%), while potash sales provided 31% of EBITDA, nitrogen sales added 26% and phosphate 8%. The company has not yet announced its financial guidance apart from proforma EBITDA’16 of $2.8bn and sales’16 of $18.1bn. Nutrien started trading on the Toronto and New York stock exchanges with soaring price in the first day of 3 January 2018. The market cap of the global largest fertilizer player exceeded $35bn in the first trading day.

Fertilisers: Weak Prices but Good Deliveries

Low prices for commodity fertilisers maintain pressure on global producers’ margins. Reviewing fertiliser stocks’ recent performances, it seems that they are victims of circumstance, and remain affected by low fertiliser price expectations. We initiate coverage of PotashCorp, Agrium and Mosaic...

Fertilisers: Rebalancing at the bottom

In this report, we analyse trends in the global fertilizer sector following significant product price drop.

PhosAgro: Sustainable in low cycle

We initiate the coverage of PhosAgro (LSE: PHOR), Russia’s largest phosphate-based fertilizer producer.

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