Stock - Fertiglobe
Fertiglobe's Q1-23 fortunes were hampered by multiple factors, including inclement weather and the drop in gas prices across Europe. Image Credit: Supplied

Dubai: The ADNOC joint venture entity Fertiglobe is on track to pay out shareholders dividends totalling at least $250 million for H1-23, and which would be payable in October. A final decision on the amount will be announced along with the Q2-23 results in August.

Fertiglobe paid $1.45 billion in dividends for 2022, including H1 payout of $750 million in October 2022 and H2's $700 million paid in April last.

The ADX-listed fertilizer company, in which OCI Global is the other major shareholder, saw first quarter 2023 revenues at $694 million and adjusted net profit at $135 million, against $1.18 billion and $361 million a year ago.

Earnings were  impacted by 'industry-wide lower selling prices during the quarter due to continued declines in European gas prices and demand delays in several key regions, primarily due to weather conditions'. There was also the deferral of 100kt in urea shipments to Ethiopia, which brought about an estimated EBITDA impact of $35 million.

Fertiglobe's free cash flow totalled $271 million as of end March.

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A better Q2

According to Ahmed El-Hoshy, CEO, “The nitrogen outlook remains favorable in the medium to longer term. New supply that commisioned in 2022, has been absorbed by the market, and limited major greenfield supply additions are expected in the next four years.

"Agricultural demand is buoyed by attractive farmer economics, incentivizing nitrogen fertilizer application to replenish decade-low grain stocks.

"European gas futures over next winter and 2024 are pricing in expectations of a tighter market than current levels, implying ammonia cost support of around $815/t (including CO2) and $650/t (excluding CO2). This should result in closures of European marginal production if pricing remains below cost for a sustained period."

Telling impact from gas price drops

Natural gas prices declined 'sharply' in Q1-2023 due to a a mild winter and brought on lower marginal costs in

Europe. This in turn led to deferred buying in several key regions.

"This, combined with relatively muted industrial demand, led to selling prices well below their levels in the same period last year, impacting our earnings growth in Q1-2023 on a year-on-year basis," said Fetiglobe in a statement.

The CEO added: "I am pleased to report that despite slower price momentum in Q1-2023 and a deferral of two 50kt urea shipments to Ethiopia at a weighted average price of $700/t, our team was able to deliver 9 per cent higher own-produced sales volumes during the quarter.

"This is driven by our disciplined commercial strategy and centralized distribution capabilities, targeting demand centres that offer attractive netbacks. We continue to have a strong order book for the coming months."