Acron Group Releases H1 2013 Operating Results

 Group’s Consolidated Output (Operating Results for Acron, Dorogobuzh, Hongri Acron and NWPC).

Mineral fertilisers

Industrial products

Phosphate inputs

Acron Acting CEO Alexander Popov comments on the results

“In the first half of 2013, the Group’s facilities produced 2.7 million tonnes of ammonia and mineral fertilisers, up 1% year-on-year. The total output of commercial products at the Group’s production facilities was 3.1 million tonnes and held steady year-on-year.

“Output of nitrogen fertilisers increased due to stable operation of ammonia plants and expansion of urea and UAN production. Acron cut back ammonium nitrate output and redirected ammonia to nitrogen fertilisers in higher demand – urea and UAN. The utilisation rate of the Group’s NPK Russian facilities remains at the highest level. Meanwhile, NPK sales programme optimisation in China had a negative impact on output at Hongri Acron in the reporting period. In the context of an overall decrease in sales of organic and non-organic compounds in Russia, the Group holds the lead for key products: urea-formaldehyde resins, liquid carbon dioxide, low-density ammonium nitrate etc.

“The Oleniy Ruchey mine continues to expand apatite concentrate production according to plans. In January, output was 30 kt, but by June it reached 60 kt, which is equal to the in-house consumption of apatite concentrate at Acron and Dorogobuzh. The Group has succeeded in securing its own raw material supplies and has discontinued purchasing apatite concentrate from Apatit.

“Our prime objectives are to systematically increase apatite concentrate output and reduce production costs. It is obvious that the costs are still high at this stage, but reducing them in further development of the project and obtaining independence from price fluctuations in the context of the apatite market liberalisation in Russia will guarantee Acron Group stable operating performance and a gradual rise in profitability for its entire business.  

“In the first half of the year, the global market for mineral fertilisers continued to experience a negative trend.  In the second quarter of 2013, nitrogen fertiliser prices decreased as expected after the end of the sowing season in Europe and the CIS.  Urea was the most affected by lower prices due to the large-scale import of this product from China expected in the third quarter. By the end of the second quarter, Chinese ports had approximately 2.5 million tonnes of urea ready for export. The entry of Latin American customers into the market was a positive event in the second quarter. Due to the long-term contract system that guarantees supply volumes, Acron Group faces no difficulties in selling nitrogen products in this market. Today, the pricing environment in the nitrogen fertiliser market has stabilised.

“Demand for potash and phosphorous fertilisers by the largest importers remained fairly weak. To a large extent this was conditioned by weaker national currencies in several importing countries. At the same time, the price of NPK complex fertiliser changed little in the first and second quarters. The first quarter was marked by lower demand in China and Southeast Asia due to unfavourable weather conditions, while in the second quarter the positive trend was held back by the decrease in prices and import volumes of key fertilisers. In this context, the mood on the NPK market is still negative. Nevertheless, despite the unfavourable market conditions, Acron Group managed to increase output of complex fertilisers in the first half of the year and maintain its leading position in this segment.”

Average world prices US$/t*

* Indicative prices FOB Baltic Sea/Black Sea.

Operating Results for Acron, Dorogobuzh, Hongri Acron and NWPC