Fertiglobe defers Q4 shipments to benefit from rising nitrogen prices
A strategic decision to exploit the rising nitrogen prices may have eaten into the profits of Fertiglobe in the fourth quarter of 2024, but it is already paying dividends for the world's largest seaborne exporter of urea and ammonia combined and the largest nitrogen fertilizer producer in the MENA region.
Fertiglobe, on Monday, reported its financial results for the three-month and twelve-month periods ended 31 December 2024. The Abu Dhabi company recorded revenues of $466 million, adjusted EBITDA of $158 million, and adjusted net profit of $42 million.
This included the strategic deferral of several shipments to early 2025 at higher prices.
Supported by tighter markets on early spring buying, continued absence of Chinese exports, elevated gas prices and supply issues in key exporting regions, nitrogen markets started 2025 on a strong note with urea prices up 26 per cent compared to their levels in early December 2024.
In Q4 2024, Fertiglobe's performance was also impacted by planned turnarounds in Algeria.
The company reported revenues for FY2024 were $2,009 million, while adjusted EBITDA was $648 million, and adjusted net profit was $174 million. Gas and power shortages in Algeria and Egypt, shipment deferrals to 2025, and the provisioning for potential changes in the Algerian gas pricing set-up impacted the performance.
Ahmed El-Hoshy, CEO of Fertiglobe, commented: 'I would like to commend the Fertiglobe team for their steadfast focus on safety and operational excellence, which in 2024 continued to propel our efforts to deliver on key strategic priorities throughout our transformation journey to becoming a world-class leader in both nitrogen and clean fuels, with excellent safety records.
With nitrogen markets starting the year on a strong note, we are pleased with our strategic decision to defer shipments (239kt) to the early weeks of 2025, shifting $59 million of EBITDA and $29 million of net profit to Q1 2025.'
Despite facing disruptions throughout the year, particularly during the summer period due to external factors in Egypt and Algeria, the decline in production was limited and amounted to only 3 per cent YoY. Adjusting for external factors and the deferrals, own-produced sales volumes would have been up 3 per cent on a YoY basis.
The company said active steps have been taken in Algeria to produce more power on-site with a new boiler to reduce dependence on the external grid and improving the future reliability of the plants.
Fertiglobe also announced it has successfully executed on its cost optimisation program, realising its target of $50 million in recurring annualised cost savings. Launched in 2023, the optimisation program focuses on introducing enhancements to the company's operating model, logistical capabilities, cost base and operational efficiencies.
The Manufacturing Improvement Plan (MIP), which is also part of the company's value enhancement program, is 75 per cent underway and is on track to deliver $100 million in incremental annual EBITDA by the end of 2025.
Dividend and outlook
The Board of Directors proposed dividends of $125 million for the second half of 2024 (equivalent to 5.5 fils per share), which brings the total dividends since the IPO to $2.5 billion.
In its outlook for the market, Fertiglobe said it expects nitrogen market fundamentals in the near term to remain firm, supported by elevated energy prices and globally tight supply during the spring season. The longer-term outlook is supported by robust demand, limited supply additions and favourable farmer economics, as well as ammonia demand from new and existing applications.
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