UAE's Fertiglobe Announces Q3 2024 Results

Fertiglobe has reported Q3 2024 revenues of US$496 million, adjusted EBITDA of US$176 million, and adjusted net profit of US$31 million. The company reported 9M 2024 revenues of US$1.5 billion, adjusted EBITDA of US$496 million, and adjusted net profit of US$135 million.

Q3 2024 and 9M 2024 reported net profits attributable to shareholders were impacted by a US$37 million and US$48 million provision related to potential changes in Sorfert’s gas pricing set-up (from Nov-2023 to Sep-2024). Notwithstanding potential adjustments, all-in costs in Algeria remain competitive with the rest of the group and globally.

Fertiglobe’s Q3 2024 own-produced sales volume fell 7 per cent Y-o-Y, driven by planned and unplanned shutdowns, while 9M 2024 own-produced sales volumes were down marginally by 2 per cent Y-o-Y to 4.2 million tons.

Adjusted for the impact of one-off external events, own-produced sales volumes in Q3 2024 and 9M 2024 would have been up 2.1 per cent and 5.0 per cent Y-o-Y on a controllable basis, whilst adjusted EBITDA would have been US$211 million (+6 per cent Y-o-Y) and US$564 million (-21 per cent Y-o-Y) in Q3 2024 and 9M 2024, respectively.

Ahmed El-Hoshy, CEO of Fertiglobe, commented: “Following Adnoc’s recent acquisition of a majority stake in Fertiglobe, we are excited to announce that Adnoc will transfer its 35 per cent equity interest in the Baytown Texas low-carbon ammonia project in the US, along with the two low-carbon ammonia UAE projects, to Fertiglobe, positioning us as the world’s largest low-carbon ammonia producer by 2029. Adnoc's stakes in the three projects will be transferred to Fertiglobe at cost and when ready for start-up, leading to an immediate contribution to earnings upon transfer, concurrent with any funding requirements, improving project returns and preserving the Company’s balance sheet during the development and construction phase. The addition of the US project to Fertiglobe's portfolio, subject to its expected FID in 2025, represents a major milestone, as it transforms us into a low-carbon ammonia growth platform with global reach and the ability to advantageously serve emerging demand centres across all locations. These milestones underscore how this transaction reinforces Fertiglobe's low-carbon ammonia growth ambitions, complementing its established leadership in nitrogen products, supported by Adnoc's full hydrogen value chain and carbon capture and sequestration (CCS) expertise.

Separately, Fertiglobe continues to progress its value enhancement initiatives in line with its goal to improve free cash flow generation across market cycles. We are pleased to have implemented 92 per cent of our US$50 million cost optimisation run-rate savings target as of September 2024 and are on track to meet the full-year target. In addition, the Manufacturing Improvement Plan (MIP) remains on target to unlock US$100 million in incremental annual EBITDA by the end of 2025 compared to 2023, with improvements focused on production and energy efficiency. While we have already taken meaningful steps on this journey, the impact on volumes was muted due to external events, including gas and power supply fluctuations in Egypt and Algeria, in addition to planned turnarounds executed during the period. Excluding the impact of external factors impacting our operations, our 9M 2024 own-produced sales volumes would have been up 5.0 per cent Y-o-Y, reflecting higher operating rates. Looking ahead, the impact of such fluctuations should be reduced, supported by improving energy efficiency levels at our facilities in Egypt, as well as the commissioning of a new boiler in Algeria, materially limiting our reliance on the external power grid.”

El-Hoshy concluded: “Supported by a disciplined capital allocation policy and our commitment to deliver strong returns to shareholders, Fertiglobe has returned a total of US$2.42 billion to shareholders since IPO, including the recently distributed H1 2024 dividend of US$150 million. Leveraging our strategic industry positioning and Adnoc’s integrated energy ecosystem, we are well placed to unlock the full potential of our product portfolio globally, while continuing to balance disciplined growth with dividend distribution to maximise shareholder value.”

VALUE ENHANCEMENT INITIATIVES: COST SAVINGS & MIP

In 2023, Fertiglobe launched an initiative to further optimise its cost structure and reinforce its top-quartile cash cost positioning, targeting US$50 million in recurring annualised savings by the end of 2024, of which 92 per cent is implemented as at September 2024, realising US$46 million in cost savings. Key focus areas include enhancements to the operating model, improvements in logistical capabilities and optimised operational cost and spend, maximising efficiencies. In addition, Fertiglobe's MIP remains on track to deliver operational and cost efficiencies, leading to incremental annual EBITDA of at least US$100 million by the end of 2025, compared to 2023 levels.

DIVIDENDS AND CAPITAL STRUCTURE

As of 30 September 2024, Fertiglobe reported a net debt position of US$957 million, implying consolidated net debt / LTM adjusted EBITDA of 1.2x, which allows the Company to balance future growth opportunities and dividend pay-out, supported by robust free cash generation and a healthy balance sheet. Fertiglobe remains committed to creating shareholder value, leveraging active cost optimisation and manufacturing improvement initiatives to bolster cash flow generation and maintain a robust balance sheet. Including the H1 2024 dividend of US$150 million paid in October 2024, Fertiglobe distributed a total of US$2.42 billion in dividends since its IPO in 2021.

FERTIGLOBE’S FULL STRATEGY UPDATE TO BE ANNOUNCED IN Q1 2025

Fertiglobe will share a detailed value creation and growth strategy update during its Capital Markets Day in Q1 2025, with the date to be announced in due course.