ADNOC-owned Fertiglobe 9-month profit at $135 million
Fertilizer company expects to see quick results from ADNOC's stake buy from JV partner
Dubai: The ADX-listed Fertiglobe pulled in net profits of $135 million for the first nine months of 2024, as revenues cleared $1.5 billion. These are the first results that the fertilizer giant has announced since Abu Dhabi’s ADNOC bought the entire stake from its erstwhile JV partner OCI.
The revenues come in lower from a year ago, when Fertiglobe had $1.77 billion for the nine months and a net profit of $366 million. In the July to end September phase, it fell into a loss of $19.3 million.
The short-term results were impacted by ‘external events’, including gas and power supply fluctuations at its Egypt and Algeria operations. There was also a $48 million provision related to potential changes in Sorfet’s gas pricing set up in Algeria, Fertiglobe says.
“Excluding the impact of external factors impacting our operations, our 9M-2024 own-produced sales volumes would have been up 5% year-on-year, reflecting higher operating rates,” said Ahmed El-Hoshy, CEO of Fertiglobe.
“Looking ahead, the impact of such fluctuations should be reduced, supported by improving energy efficiency levels at our facilities in Egypt, as well as the commissioning of a new boiler in Algeria, materially limiting our reliance on the external power grid.” (El-Hoshy was formerly with OCI and switched to take over Fertiglobe once the ADNOC stake buy decision was made.)
Fertiglobe will be announcing a 'detailed value creation and growth strategy update' on its capital markets day in Q1-2025.
On ADX, the stock's running at Dh2.7, with the 52-week range being Dh2.22-Dh3.47.
ADNOC's transfer of key projects
It was mid-October that ADNOC finally took control of the OCI stake in Fertiglobe as a step towards transitioning the latter to be its low-carbon ammonia platform. Related ADNOC asssets are being transferred to the Fertiglobe stable, notably the 35% equity interest in the Baytown Texas low-carbon ammonia project in the US. There will also be the addition of two low-carbon ammonia UAE projects to Fertiglobe, ‘positioning us as the world’s largest low-carbon ammonia producer by 2029’.
Most importantly, ADNOC's stakes in the three projects will be transferred ‘at cost’ and when they are actually ready for start-up. This will lead to an ‘immediate contribution to earnings upon transfer’.
“The addition of the US project to Fertiglobe's portfolio, subject to its expected FID in 2025, represents a major milestone, as it transforms us into a low-carbon ammonia growth platform with global reach and the ability to advantageously serve emerging demand centres across all locations,” said a statement.
Since October, the Fertiglobe stock had been on a high, gaining over 10% as investors sized up the many-sided gains that outright ADNOC ownership would do.
Debt position
By end September, Fertiglobe's net debt position was $957 million, implying a 'consolidated net debt/LTM (last 12 month) adjusted EBITDA of 1.2x. This allows Fertiglobe to 'balance future growth opportunities and dividend pay-out, supported by robust free cash generation and a healthy balance-sheet'.
"Leveraging our strategic industry positioning and ADNOC’s integrated energy ecosystem, we are well placed to unlock the full potential of our product portfolio globally, while continuing to balance disciplined growth with dividend distribution to maximize shareholder value,” said the CEO.
Another medium-term target for Fertiglobe would be to dig deeper into the North American markets, to add to its fairly high visibility in some of the other end-user territories. (El-Hoshy incidentally had a direct role in the North America operations during his time with OCI.)