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Adnoc and Fertiglobe, a strategic partner of OCI Global, reported Q1 2023 revenue of $694 million, adjusted EBITDA of $297 million, adjusted net income of $135 million and free cash flow of $271 million.
Earnings were impacted by industry-wide lower selling prices during the quarter, with an estimated EBITDA impact of $35 million.
Despite a slowdown in price momentum in the first quarter, Fertiglobe’s own production volumes rose 9% during the quarter. This is driven by the company’s disciplined commercial strategy and centralized distribution capabilities, targeting demand centers that offer attractive netbacks.
strong order book
Fertiglobe’s order intake for the coming months remains strong and the market started to tighten going into the second quarter, leading to higher prices in some areas.
In line with its continued commitment to creating and returning shareholder value, Fertiglobe guided to pay a first half 2023 dividend of at least $250 million by October 2023. The exact amount will be disclosed in the second quarter 2023 financial results in August 2023.
Ahmed El-Hoshy, CEO of Fertiglobe, commented: “Gas prices fell sharply in the first quarter due to the warm winter, which led to lower marginal costs in Europe and delayed purchases in several key regions. Lower than the level of the same period last year, affecting the year-on-year growth of earnings in the first quarter. In the medium and long term, the outlook for nitrogen remains positive. New supply commissioned in 2022 has been absorbed by the market, and new major greenfield supply is expected to be limited in the next four years. Meanwhile, agricultural demand has been boosted by an attractive farmer economy, encouraging nitrogen fertilization to replenish decade-low valley stocks.
free cash generation
“We are advancing several initiatives to further support free cash generation, including our manufacturing improvement program announced last year, which is expected to deliver operational and EBITDA efficiencies over the next 2-3 years.
“Additionally, we have recently launched a program to further optimize our Fertiglobe cost structure, targeting annual savings of $50 million, aimed at strengthening our position in the top quartile of cash costs, which we expect to achieve over the next 12-18 months. These savings will be realized within a short period of time. We also expect the recent depreciation of the Egyptian pound to have a positive impact on our cost base.”
Following the first phase of trial operation of Egyptian green hydrogen at Ain Sokhna during COP27 in the fourth quarter of 2022, Fertiglobe announced the production of green ammonia to specification at its Egyptian plant.
Electrolyzer plant
The company expects production to ramp up in 2023 and aims to make a final investment decision on the full-scale 100 MW electrolyser plant this year. The plant aims to produce up to 15,000 tonnes of green hydrogen, which will be used as a feedstock for Fertiglobe’s existing ammonia plant to produce up to 90,000 tonnes of green ammonia per year.
Through these projects and initiatives, the company reaffirms its commitment to delivering on its sustainability agenda and making meaningful progress towards a more sustainable production footprint, while building on other industries in its value chain, including power and transport play a role in decarbonization.
Dividends and Capital Structure
Fertiglobe reported a net cash position of $564 million as of March 31, 2023, compared to $287 million as of December 31, 2022, supporting future growth opportunities and an attractive dividend payment.
The company reaffirms its dividend policy to substantially pay out all excess free cash flow after providing growth opportunities, while maintaining investment-grade credit ratings (S&P: BBB-, Moody’s: Baa3, Fitch: BBB-; all with stable outlooks). — trade arab news agency
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