Stock - Fertiglobe
Fertliser price increases and demand helps explain in part the revenue and profit gain for Fertiglobe, which is owned by ADNOC and OCI. Image Credit: Supplied

Dubai: The ADNOC joint venture Fertiglobe recorded a whopping 105 per cent gain in second quarter revenues to $1.47 billion, which will be more than enough for a H1-2022 dividend payout of $750 million, This is higher than the earlier guidance given of $700 million.

Once approved, this will be paid in October. For the first six months, Fertiglobe had revenues of Dh2.65 billion, from which it derived Dh1.09 billion in net profit.

“Q2-2022 marks another quarter of solid performance, driven by a favourable price backdrop supported by strong in-season demand, tight market balances and elevated gas prices in Europe, as well as higher sales volumes due to a phasing of some shipments from Q1-2022 to this quarter," said Ahmed El-Hoshy, CEO of Fertiglobe. "We are pleased to announce an H1-2022 dividend of $750 million driven by strong earnings, healthy cash conversion and our robust capital structure."

Another ADNOC joint venture, the petrochemicals giant Borouge, had last week indicated $975 million as dividend for full-year 2022.

Fertiglobe is the largest nitrogen fertilizer producer in the Middle East and North Africa. OCI, the other shareholder in the company, is headquartered in the Netherlands.

Fertiglobe’s low leverage positions the company favorably to selectively pursue value-creative growth opportunities, including organic expansions below replacement cost, capitalizing on the emerging demand for low-carbon ammonia as a solution to decarbonize industries that make up around 90% of current global greenhouse gas emissions

- Ahmed El-Hoshy of Fertiglobe

Helped by fixed gas pricing

On the second-half prospects, Fertiglobe says nitrogen prices have ‘support to remain above historical averages, driven by structurally tight supply over 2022-2026, crop fundamentals supporting demand, and elevated gas prices.

“Fertiglobe’s assets are favourably positioned on the global cost curve, and the company is benefitting from a higher global gas price environment. Fertiglobe has a significant competitive advantage with favourable gas price supply agreements, including fixed prices in Abu Dhabi and profit-sharing mechanisms in North Africa.”

Paying for the dividend
Fertiglobe’s dividend policy is to 'substantially pay out all excess free cashflows' after setting aside optimum funds for future growth opportunities and maintaining investment-grade credit ratings.

"Fertiglobe’s potential for attractive future dividends is supported by its strong cash flow performance and competitive position on the global cost curve," a statement said. "Strong earnings and cash generation during the quarter resulted in a net cash position of $445 million as of 30 June 2022, compared to net debt of $487 million as at 31 December 2021, supporting future growth and attractive dividend payouts."