Abu Dhabi: Fertiglobe, a major global exporter of urea and ammonia listed on the ADX, reported revenues exceeding $1 billion for the first half of 2024. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were $378 million, while adjusted net profit reached $134 million. Fertiglobe also generated $225 million in free cash flow.
In the second quarter of 2024, Fertiglobe's revenues totalled $496 million, with an adjusted EBITDA of $156 million and an adjusted net profit attributable to shareholders of $15 million.
The company faced higher natural gas costs and steady grain prices in Q2 2024 compared to the previous quarter. However, nitrogen prices were affected by delayed demand, cautious buying, and reduced urea imports from India, though supply disruptions at the end of the quarter provided some relief.
The company said in a statement issued Thursday that its strong balance sheet and effective cash flow management support its growth strategy while allowing for shareholder returns. Fertiglobe also plans to propose dividends for the first half of 2024 to its Board in September, with payment scheduled for October.
Dividends and capital structure
As of June 30, 2024, Fertiglobe reported a net debt of $880.6 million, resulting in a net debt to LTM adjusted EBITDA ratio of 1.0x. This solid financial position supports the company's balance between future growth and dividend payouts. The company said a proposal for H1 2024 dividends will be presented to the Board in September, with payments slated for October 2024.
Growth initiatives
Ahmed El-Hoshy, CEO of Fertiglobe, said, "Over the past quarter, Fertiglobe has taken important steps towards achieving its strategic business objectives by maintaining the positive momentum surrounding some of its most significant operational projects and decarbonization initiatives."
He listed several initiatives that have helped the company exceed revenue expectations. Fertiglobe, in collaboration with TA'ZIZ, GS Energy Corporation, and Mitsui & Co., Ltd., has made a Final Investment Decision (FID) on the TA'ZIZ 1 million tonnes per annum (mtpa) low-carbon ammonia project. The company has awarded the construction contract to Tecnimont S.p.A., with production anticipated to commence in 2027.
Additionally, Fertiglobe has been selected as the winning bidder in the pioneering H2Global auction. Under the €397 million contract, Fertiglobe will export renewable ammonia from Egypt to Europe for €1,000 per ton until 2033. This agreement supports the development of the first integrated green hydrogen plant in Africa, set to reach FID by mid-2025.
Fertiglobe, with ADNOC's support, has also achieved a milestone by delivering the world's first certified bulk commercial shipment of low-carbon ammonia, produced via carbon capture and storage, to Mitsui & Co., Ltd. for use in clean power generation in Japan. This shipment, produced at Fertiglobe's Abu Dhabi facilities, is part of ADNOC's $23 billion investment in decarbonization and low-carbon solutions.
Cost optimization
The company has made significant strides in its cost optimization program, implementing 84 per cent of its $50 million target by June 2024, resulting in $42 million in cost savings. Fertiglobe is also advancing its Manufacturing Improvement Plan (MIP), which aims to generate at least $100 million in additional annual EBITDA by the end of 2025 compared to 2023, focusing on enhancing energy efficiency and production. Artificial Intelligence (AI) investments are also being prioritized to boost operations, maintenance, and sustainability.
In Q2 2024, Fertiglobe saw a 2 per cent year-over-year decrease in its own-produced sales volumes. This decline was driven by a 5 per cent reduction in urea volumes despite a 12 per cent increase in ammonia sales. Excluding gas supply shortages in Egypt, own-produced sales volumes would have risen by 8.1 per cent year-over-year for Q2 2024 and 6.6 per cent year-over-year for H1 2024.
Regarding ADNOC's acquisition of OCI Global's 50 percent equity stake in Fertiglobe, El-Hoshy said that the transaction is progressing and is expected to bolster ADNOC's chemicals and low-carbon ammonia strategies. Fertiglobe remains confident in its ability to advance global low-carbon hydrogen and ammonia value chains within ADNOC's supportive framework.
