URALCHEM Reports IFRS Financial Results For The First Nine Months Of 2014

URALCHEM, OJSC, the holding company of the URALCHEM Group, one of the largest producers of nitrogen fertilizers in Russia, announced its unaudited IFRS financial results for the first nine months of 2014. End Quote

(1888PressRelease) December 03, 2014 - The revenue for the nine months of 2014 decreased by 6% and reached RUB 52.66 bln, as compared to RUB 56.26 bln in January-September 2013. The operating profit went 6% up and reached RUB 15.45 bln as compared to RUB 14.62 bln in the same period of 2013. The operating profit margin in the reporting period increased by 3% to 29% compared to 26% in the nine months of 2013.

· Revenue in the reporting period amounted to 52.66 bln RUB, compared to 56.26 bln RUB in January-September 2013.

· Operating profit increased to 15.45 bln RUB, compared to 14.62 bln RUB for the nine months of 2013.

· Adjusted EBITDA increased to 18.27 bln RUB, compared to 17.31 bln RUB in the same period of 2013.

· Net loss comprised 19.17 bln RUB, compared to profit of 10.08 bln RUB in the same period of 2013.

Adjusted EBITDA in the reporting period increased by 6% reaching RUB 18.27 bln, compared to

RUB 17.31 bln a year earlier. The adjusted EBITDA for the nine months of 2014 increased up to 35% of the revenue, compared to 31% in the same period of 2013.

The decrease in the Company's revenue resulted from the forced shutdown of Voskresensk Mineral Fertilizers enterprise. Early in 2014, the plant had to go into forced temporary downtime due to the interruption in delivery of the main raw material required for production of phosphate fertilizers - apatite concentrate - by the monopolist (JSC "PhosAgro").

An increase in the Company's adjusted EBITDA demonstrates high operating efficiency. It is achieved through continuous upgrade of production facilities and development of distribution network. Besides, URALCHEM is constantly reinforcing the logistics component of the business: the transshipment Riga Fertilizer Terminal started operations in December 2013, and in August 2014, the Company acquired a controlling share in Ventamonjaks - the largest ammonia transshipment terminal in the Baltic Sea.

Markets

During the nine months of 2014, prices for ammonia ranged from $410 to $590/tonne. The main reasons for price fluctuations were lack of Ukrainian and Egyptian products; lack of free offers in the third quarter; demand fluctuations in the US, North Africa and Far East. The average price for ammonia during nine months of 2014 was $470/tonne which is 5.4% lower than in the same period of the last year.

Urea price in the reporting period ranged from $290/tonne to $360/tonne. The main factors influencing the price level were devaluation of currencies of several large importers; limited supply from Ukraine, Egypt and Libya; production problems of African and Middle Eastern producers, and strong demand in Asia and Latin America in the third quarter. The average urea price in the reporting period amounted to $314/tonne which is 7.4% lower than in January-September 2013.

Price for ammonium nitrate in January-September of the current year varied from $250 to $320/tonne. The main reasons for price movements were seasonal demand fluctuations on domestic markets of the CIS countries; insufficient supply from Ukrainian producers; and beginning of the demand season in Russia and Ukraine in September. On the average, prices for ammonium nitrate amounted to $281/tonne in the reporting period, which is 3.4% lower than in the same period of the last year.

Production and Sales

Despite a less favorable market outlook for mineral fertilizers during the nine months of 2014 than during the nine months of 2013, the Company was able to increase production and sales of key products: ammonium nitrate and its derivatives. Thus, EBITDA for the nitrogen fertilizer segment increased by 9%. The main reason for a decline in performance in other areas was the shutdown of Voskresensk Mineral Fertilizers enterprise.

Financial Situation

Cash generated from operating activities for the nine months of 2014 amounted to 9.60 bln RUB, compared to 13.14 bln RUB in the same period of the last year. As at 30 September 2014, the Company's net debt amounted to 177.87 bln RUB.

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