Public Joint-Stock Company PhosAgro

Q3 2021 revenue was RUB 116 billion, up 64% year over year, while sales volumes were 40.6 million tonnes, down 7.7% year over year. EBITDA exceeded RUB 57 billion, up 105% year over year, and EBITDA margin was a little above 49% versus 39% in Q3 2020. Cost of goods sold was RUB 57 billion, up 29% year over year, driven mainly by ammonia costs up 275% year over year and sulphur costs almost 5x year over year. Free cash flow was close to RUB 21 billion, 7% higher year over year; total CapEx was RUB 10.6 billion in Q3, and the 2021 CapEx budget is RUB 46.5 billion. Net debt was around RUB 123 billion at quarter-end, net debt/EBITDA was 0.83x, and total debt was RUB 191 billion. For the market backdrop, management cited average MAP at $695 per tonne, urea at $442 per tonne, sulphur at $220, and ammonia Baltic at $578 per tonne. Forward-looking, management said Q4 fertilizer prices were continuing to rise on energy tightness and Chinese export restrictions, and it expected high nitrogen prices to stay for the next 3-5 months.

CEO Andrey Guryev framed the quarter as exceptionally strong and said fertilizer markets remain fundamentally tight, with very low inventories, strong seasonal demand, and limited exports from China. He argued the temporary Russian export quotas should not hurt PhosAgro materially and may even support global prices and profitability, while emphasizing that the company prioritizes Russian farmers alongside exports. He also said the recent price strength is likely to persist unless market conditions change.

CFO Alexander Sharabaika highlighted that the business is benefiting from strong pricing, even though feedstock costs are moving higher because the company buys ammonia, sulphur and potash at prevailing market prices. He said current free cash flow includes working capital effects, which were pressured by higher prices and extended payment geographies, and suggested working capital could release if sales geography changes. On capital allocation, he said the company can pay more than 100% of free cash flow in dividends when leverage is low, that its strategic leverage target is around 1x to 1.5x net debt/EBITDA, and that 2021 CapEx remains on schedule within the RUB 46.5 billion budget.

Analysts pressed management on export quotas, domestic price freezes, costs, dividend policy, and whether the strong price environment would normalize. Management said the Russian quotas cover nitrogen and phosphate fertilizers for 6 months at roughly 50% of last year’s export volumes, and described the limits as comfortable rather than restrictive. On costs, management said feedstock prices are likely to remain elevated for the next 3-5 months because gas and energy inventories are still low. On dividends and leverage, management said the company bases payouts on free cash flow and can go above 100% of FCF when leverage is low; a broader strategy update is expected in Q1 next year after tender decisions are finalized.