Acron Group’s Output Reached 7.5 million tonnes in 2018

28 January 2019

Acron Group’s Output Reached 7.5 million tonnes in 2018

The Group’s Consolidated Output (including operating results for Acron, Dorogobuzh and North-Western Phosphorous Company)

Note:
Commercial output is output less in-house consumption.

Chairman of Acron’s Board of Directors Alexander Popov commented on the results:

“For the sixth year in a row, we are pleased to report an increase in production. This is not an accident or coincidence - it is the result of hard work on the part of our entire team. We are proud of these numbers, but we are not going to stop there. Our development strategy and the results we have already achieved will support several more years of sustainable production growth.

“The most notable events of 2018 were the launch of the sixth urea unit and the record high UAN output. In 2019, we are excited to launch two nitric acid units that are currently in the final stage of construction. In addition, Dorogobuzh’s ammonia unit will be significantly upgraded to increase its capacity by more than 20%”.

Performance Analysis

In 2018, commercial products output reached a record high 7.5 million tonnes, up 2.5% year-on-year. Mineral fertiliser output increased 2.2% to 6.2 million tonnes.

Acron’s site in Veliky Novgorod upgraded its urea units and launched the new Urea-6 unit, boosting output to 1.134 million tonnes, which broke down as 1.015 million tonnes of agricultural urea and 119,000 tonnes of industrial urea. Output of UAN, which is produced from a urea solution, increases in line with the production of urea solution. In 2018, UAN output was 1.422 million tonnes, making Acron Group the world’s largest exporter of this fertiliser. Moreover, total UAN capacity today is even higher and reaches 1.7 mtpa.

Acron Group’s complex fertiliser production was down 13% year-on-year to 2.519 million tonnes due to reduced output of bulk blends in response to market conditions. Group shifted production to favour nitrogen products and NPK. Therefore, chemical NPK production was up 4.9%.

In 2018, apatite concentrate output was up 4% year-on-year to a record high of 1.214 million tonnes. Ore extraction from the underground mine is gradually increasing, and in the reporting period, the underground mine produced 18% of the total ore output.

Market Trends

In 2018, the average urea price was USD 251 FOB Baltics, up 15% year-on-year due to high demand in Latin America and India and decreased export from China due to higher production costs.

Along with urea prices, UAN prices also increased 23% in 2018 to USD 179 FOB Baltics. In the reporting period, the average AN price was down 2% to USD 188 FOB Baltics as demand shifted to other nitrogen fertilisers that are safer to transport. Acron Group reacted flexibly by shifting production from AN and increasing UAN output to the maximum.

In 2018, the average NPK price also showed an upward trend due to an increase in all three market segments: nitrogen, phosphorous, and potash. The average price for NPK 16-16-16 was up 13% to USD 300 FOB Baltics, and the NPK premium over the product basket remained high.

In Q4 2018, prices for almost all products rose in response to high seasonal demand in Latin America and increased cost of production in Europe due to higher gas prices.

Average Indicative Prices, USD/t, FOB Baltic/Black Sea

Media contacts:

Sergey Dorofeev
Anastasiya Gromova
Tatiana Smirnova
Public Relations
Phone: +7 (495) 777-08-65 (ext. 5196)

Investor contacts:
Ilya Popov
Investor Relations
Phone: +7 (495) 745-77-45 (ext. 5252)

Background Information

Acron Group is a leading vertically integrated mineral fertiliser producer in Russia and globally, with chemical production facilities in Veliky Novgorod (Acron) and the Smolensk region (Dorogobuzh). The Group owns and operates a phosphate mine in Murmansk region (North-Western Phosphorous Company, NWPC) and is implementing a potash development project in Perm Krai (Verkhnekamsk Potash Company, VPC). It has a wholly owned transportation and logistics infrastructure, including three Baltic port terminals and distribution networks in Russia and China. Acron’s subsidiary, North Atlantic Potash Inc. (NAP), holds mining licenses for 13 parcels of the potassium salt deposit at Prairie Evaporite, Saskatchewan, Canada. Acron also holds a minority stake (19.8%) in Polish Grupa Azoty S.A., one of the largest chemical producers in Europe.

In 2017, the Group sold 7.3 million tonnes of various products to 65 countries, with Russia, Brazil, Europe and the United States as key markets.

In 2017, the Group posted consolidated IFRS revenue of RUB 94,342 million (USD 1,617 million) and net profit of RUB 14,260 million (USD 244 million). Acron’s shares are on the Level 1 quotation list of the Moscow Exchange and its global depositary receipts are traded at the London Stock Exchange (ticker AKRN). Acron employs approximately 11,000 people.

For more information about Acron Group, please visit www.acron.ru/en.