At some point this year, the deal will close whereby ADNOC owns 86.2 per cent in Fertiglobe. Image Credit: Supplied

Dubai: The fertilizer manufacturer Fertiglobe, which pulled out $505 million as 2023 net profit, expects a speedy recovery in global demand and which would then provide the platform for its own prices to pull higher.

“Demand is expected to recover ahead of the Spring application season in the Northern Hemisphere, with healthy demand in other regions, including Brazil and Australia,” said a statement. “Further price support is expected to be driven by low inventories in key importing regions, ongoing restrictions on Chinese exports, and supply chain disruption in the Red Sea, to which Fertiglobe has limited exposure.”

The ADNOC JV with OCI Global, Fertglobe had reported net profits of $1.82 billion in 2022.

Revenues last year came to $2.41 billion, down from $5 billion.

Over the final three months of 2023, ammonia prices had increased due to widespread supply disruptions, while urea prices were impacted by demand deferrals into early 2024, and which led to reduced imports from key regions, Fertiglobe said.

Fertiglobe's '23 dividend
The company will offer shareholders an H2-2023 dividend of $200 million (equivalent to 9 fils a share). This would take full-year dividends of $475 million - and one of the 'highest dividend yields in the company’s industry and market'.

ADNOC’s stake buy

The company is also ready for its ‘next chapter’.

This is in ‘light of the recently announced sale of OCI's 50 per cent shareholding in Fertiglobe to ADNOC for $3.62 billion’.

The transaction will see ADNOC own 86.2 per cent, with the deal expected to close in 2024.

“The deal supports our future growth plans and makes us a key component of ADNOC’s ambitious roadmap and will enable Fertiglobe to further leverage ADNOC's resources, expertise, and network to pursue new growth opportunities,” said Ahmed El-Hoshy, CEO of Fertiglobe.

Mapping its immediate priorities

The strategy will be to 'continue balancing dividend payments with selective investment in value accretive growth projects. This will be supported by 'healthy' free cash flow conversion and a 'robust' balance-sheet.

"S&P and Fitch's recent placement of Fertiglobe on a positive credit watch, pending completion of the ownership transfer to ADNOC, further reinforces our investment grade positioning, and supports our balanced approach towards growth," the statement said.