Stock - Fertiglobe
Fertiglobe expects a combination of factors to turn favourable during the coming weeks, notably a firming up in nitrogen pricing. Image Credit: Supplied

Dubai: The ADNOC joint venture Fertiglobe expects its numbers to get a bounce during the third quarter after recording 76 per cent drop in nine-month 2023 net profit, to $254.4 million against just over $1 billion last year.

The company’s board of directors have signalled their approval for H1-2023 dividends of $275 million, equivalent to 12 fils/share, and ‘payable in the next few weeks’. This works out to a dividend yield of 7.3 per cent.

Fertiglobe, listed on ADX, makes the case for improved returns from the firming up in nitrogen prices – a key ingredient for its fertilizer products - since the third quarter. “Nitrogen prices have increased significantly from their troughs, and we expect the benefits from these increases to materialize in the fourth quarter,” said Ahmed El-Hoshy, CEO.

“The nitrogen outlook in the medium to longer term remains favorable, with limited incremental supply additions over the next several years, healthy farm economics, and elevated energy prices raising marginal cost floors, particularly going into the winter season.” 

Revenue drop

Fertiglobe’s revenues for the nine months were $1.7 billion, lower by 55 per cent.

“The expected recovery in demand ahead of the spring application season in the Northern Hemisphere should continue to support prices going in Q4-2023,” the CEO added. “Fertiglobe remains ideally positioned to serve key import markets from our strategically located facilities.”

A new $500m facility
Fertiglobe has reached an agreement with its 'core relationship banks' on the terms of a new $500 million term facility, which was 1.9x oversubscribed and 'expected to be executed shortly'.

"Once the facility is executed, the proceeds will be used to refinance shorter term borrowings, further improving Fertiglobe’s maturity profile and liquidity," the company said in a statement.

Dividend promises

“Our healthy free cash flow conversion and balance-sheet allow us to continue to balance dividend payments and selective growth spending on value accretive projects,” said the CEO.

Going forward, more favourable trends are being spotted in the global fertizer industry. Apart from nitrogen prices,  ammonia and urea are up around 150 per cent and 35 per cent, respectively, from trough levels. These are 'supported by demand recovery and tightening supply'.

"Fertiglobe's short-term outlook is further underpinned by a strong order book for ammonia and urea sales at higher prices for the remainder of the year," the statement said.