The strategic partnership between ADNOC and OCI, Fertiglobe, reported that its revenues for Q2 2022 increased by 105 percent to USD1,471 million, while adjusted EBITDA rose 155 percent to USD770 million compared to the corresponding period in 2021.
Free cash flow of the company increased to USD789 million in Q2 2022, compared to USD328 million in Q2 2021. This supported a first-half dividend of USD750 million, up from previous guidance of USD700 million.
CEO of Fertiglobe, Ahmed El-Hoshy, stated that Q2 2022 was marked by robust performance, driven by a favourable price backdrop and firm in-season demand. This was further supported by tight market balances, increased gas prices in Europe and higher sales volumes, he added. The CEO said that he was pleased to announce a H1 2022 dividend of USD750 million, which was driven by strong earnings, robust capital structure and healthy cash conversion.
Ahmed El-Hoshy added that the company has received investment-grade credit ratings from three international rating agencies, namely S&P (BBB-), Moody’s (Baa3) and Fitch (BBB-), which had been supported by a prudent financial policy and attractive cash flow profile. He also mentioned that Fertiglobe was included in the FTSE Emerging Market Index in June 2022 and the FTSE ADX 15 Index in March 2022, which represents the 15 largest and most liquid companies listed on the Abu Dhabi Stock Exchange.
In addition, El-Hoshy stated that the outlook for Fertiglobe’s’s nitrogen end markets continued to be underpinned by healthy farm economics, tight supply and globally low grain stocks that encourage the use of nitrogen fertilisers. He said that natural gas prices in Europe are expected to remain high through 2023, which would set breakeven pricing that was above historical global prices for urea and ammonia.
Fertiglobe focuses on operational excellence
The CEO said that the company continues to focus on operational excellence and utilisation of young production assets efficiently, while at the same time, fully capitalising on global supply chains in partnership with OCI. He added that the company intends to plug any supply gaps in an effort to address global food security concerns. This effort would be supported by the company’s leading position as a producer and global exporter of essential nitrogen fertiliser products.
Mr. Ahmed El-Hoshy stated that Fertiglobe’s low leverage favourably positioned the company to pursue value-added growth opportunities, which include organic expansion below replacement costs, while capitalising on the growing demand for low-carbon ammonia to decarbonise industries that contribute to global greenhouse gas emissions.
He added that Fertiglobe looks forward to continuing to deliver on its strategy of creating value for its stakeholders.
Prices of nitrogen have the potential to remain above historical averages, driven by crop fundamentals supporting demand and increased gas prices globally. Assets of the company are favourably positioned on the global cost curve, and the company benefits from higher gas prices globally. Fertiglobe enjoys a considerable commercial advantage which include favourable gas supply agreements that include fixed prices in Abu Dhabi, and profit-sharing agreements in North Africa.
Fertiglobe follows a dividend policy of making substantial excess free cash flow payouts after providing for growth opportunities, while maintaining investment-grade credit ratings. The company generated a robust free cash generation in H1 2022, allowing it to announce cash dividends of USD750 million for the first half of 2022. The dividend will be presented to shareholders for approval, and will be payable in October 2022.
Fertiglobe was supported by strong cash flow performance, while strong earnings and cash generation during the quarter ended June 30 resulted in a net cash position of USD445 million. This has in turn supported future growth plans of the company and enabled attractive dividend payouts.