PhosAgro PJSC: PhosAgro Reports 4Q and FY 2021 Financial Results. Record-High Annual EBITDA Exceeds RUB 191 Billion

PhosAgro Reports 4Q and FY 2021 Financial Results

Record-High Annual EBITDA Exceeds RUB 191 Billion

Moscow - PhosAgro ("PhosAgro" or "the Company") (Moscow Exchange, LSE: PHOR), one of the world's leading vertically integrated phosphate-based fertilizer producers, today announces its consolidated IFRS financial results for the 12 months (FY) of 2021.

4Q and FY 2021 highlights

Revenue for 4Q 2021 increased by 117.2% year-on-year to RUB 127.9 billion (USD 1.8 billion), driven by higher sales volumes combined with high demand in global markets.

Revenue for FY 2021 increased by 65.6% year-on-year and amounted to RUB 420.5 billion (USD 5.7 billion). This growth was driven mainly by the Company's record-setting production volumes, a global recovery in fertilizer prices during the year and strong end-user demand combined with low inventories in key markets.

In 4Q 2021, the Company's EBITDA more than tripled year-on-year to RUB 61.5 billion (USD 847 million). EBITDA margin for the quarter grew to 48.1%, driven by upgrades to production assets, efficiency improvements at key production units and high levels of self-sufficiency in key inputs.

In FY 2021, the Company's EBITDA more than doubled year-on-year to RUB 191.8 billion (USD 2.6 billion). EBITDA margin for the year increased to 45.6%.

Capex for FY 2021 amounted to RUB 48.0 billion (USD 651 million), an increase of 17.3% year-on-year. This growth was driven by investments in the final stage of construction of a state-of-the-art production facility in Volkhov and the implementation of other projects in line with the Company's long-term development strategy.

In 4Q 2021, free cash flow amounted to RUB 22.9 billion (USD 315 million), up from RUB 2.9 billion in 4Q 2020.

Free cash flow was a record RUB 77.9 billion (USD 1.1 billion) for FY 2021, up 83.1% year-on-year.

Adjusted net profit** tripled year-on-year in FY 2021 to RUB 130.2 billion (USD 1.8 billion).

Net debt as of 31 December 2021 decreased slightly year-on-year, amounting to RUB 153.7 billion (USD 2.1 billion). The net debt/EBITDA ratio decreased to 0.8x as of the end of 2021.

Financial and operating highlights

RUB/USD exchange rates: average 4Q 2021 rate: 72.6; average 4Q 2020 rate: 76.2; as of 31 December 2021: 74.3; as of 31 December 2020: 73.9.

* EBITDA is calculated as operating profit adjusted for depreciation and amortisation.

** Net profit as reported minus FX gain or loss.

Commenting on the Company's performance, Xavier Rolet, Chairman of PhosAgro's Board of Directors, said:

"Notwithstanding a great financial performance, PhosAgro made notable progress in the execution of its sustainable strategy and extended the selection and quality of its ESG ratings throughout 2021. For example, in keeping with the Climate and Water Strategies approved by the Board in 2020, we've added water security to our work with ratings agency CDP in the area of climate change and were delighted to see our overall climate change rating raised to B in 2021 and our inaugural water security rating achieving a C.

"In 2021 we also participated in the S&P ESG rating for the first time and achieved a strong CSA result of 46 points.

"Further in December 2021, the international agency Sustainalytics recognised PhosAgro as the best company in the global agrochemical sector in terms of ESG - PhosAgro's ESG risk rating improved from 27.3 to 22.8.

"PhosAgro remains committed to its policy of proactive cooperation with supranational institutions dedicated to Climate Change action. In 2021, PhosAgro and the United Nations Food and Agriculture Organization (FAO) announced the extension of their cooperation agreement on global soil protection through 2023. Working together, FAO and PhosAgro have built a global network of 760 soil laboratories spanning 150 countries, extending the reach of the Soil Doctors project, which promotes the use of best practices in agriculture. In the next stage of cooperation, the FAO and PhosAgro plan to focus on solving the issue of soil health, with particular focus on contamination linked to heavy metals."

Commenting on the Company's financial results, Andrey Guryev, PhosAgro's CEO and a member of the Board of Directors, said:

"Looking at the Company's performance in 2021, I would note that this was a record year for us not only in terms of production; the Company also achieved all-time highs in terms of its financial results.

"Growth in the production and sales of fertilizers, driven by the implementation of our long-term investment programme, enabled us to increase revenue by more than 50%, exceeding RUB 420 billion for the year. Favourable conditions in global agricultural markets also led to higher margins and increased cash flow. EBITDA more than doubled in 2021 to RUB 192 billion, our best-ever result since going public.

"Despite rising investments in fixed assets and expenditures on major overhauls, which amounted to a little under RUB 50 billion in total for the year, we were able to generate almost RUB 80 billion in free cash flow during the year thanks to our highly efficient business and flexible sales system focused on the most attractive markets.

"High sales margins and a balanced long-term development programme ensured that the Company's net debt decreased slightly to about RUB 154 billion as of the end of the year. At the same time, however, our net debt/EBITDA ratio decreased to 0.8x, which is a comfortable level in the long term, as per our financial policy."

4Q 2021 market conditions

In the course of 4Q 2021, prices in global phosphate-based fertilizer markets were impacted by export restrictions in China in October, which forced DAP consumers in Asia and MAP consumers in Latin America and Australia to make essential seasonal purchases from alternative sources, including from Russia and Morocco. In addition, scaled-back US production of DAP/MAP also supported import demand in the region. The average price of MAP in 4Q 2021 was USD 767 per tonne (FOB Baltic), up from USD 695 per tonne (FOB Baltic) the previous quarter. Prices for NPK fertilizers increased on the back of seasonal demand in European countries and rising world prices for potassium feedstocks. The average price for 15-15-15 NPK fertilizer in 4Q 2021 was USD 547 per tonne (FOB Baltic), which was up USD 121 from the average price in 3Q 2021 (USD 426 per tonne FOB Baltic). Contract prices for phosphoric acid supplies to India in 4Q 2021 were agreed at USD 1,330 per tonne of 100% P2O5 (CFR India), which was USD 170 per tonne higher than the price in 3Q 2021, in line with changes in the phosphate-based fertilizer market. Phosphate feedstock prices (68%-72% BPL) in 4Q 2021 were at USD 130-225 per tonne (FOB Morocco), compared with USD 105-190 per tonne (FOB Morocco) in 3Q 2021. World sulphur prices also rose thanks to favourable conditions in phosphate-based fertilizer markets, reaching USD 222 per tonne (FOB Baltic) in 4Q 2021, compared with USD 185 per tonne (FOB Baltic) the previous quarter.

Global prices for nitrogen-based fertilizers and commercial ammonia also reached record highs, mainly due to the ongoing energy crisis and record increase in Natural Gas prices in Europe. The introduction of restrictions on urea exports from China led to an imbalance whereby the demand in Asian markets outstripped the supply, especially in India, where the fourth quarter has traditionally accounted for the largest volume of import purchases. The average price level for urea in 4Q 2021 was USD 788 per tonne (FOB Baltic), compared with USD 442 per tonne (FOB Baltic) in 3Q 2021. The average price for commercial ammonia increased from USD 574 per tonne (FOB Baltic) in 3Q 2021 to USD 839 per tonne (FOB Baltic) in 4Q 2021.

4Q and FY 2021 financial performance

In 4Q 2021, the Company's revenue increased by 117.2% year-on-year to RUB 127.9 billion (USD 1.8 billion). The main growth driver was a 20% year-on-year increase in fertilizer sales combined with favourable conditions in phosphate- and nitrogen-based fertilizer markets.

The Company's 4Q 2021 EBITDA increased by 244.3% year-on-year to a record RUB 61.5 billion (USD 847 million). This substantial growth was due in part to the launch of new production facilities at the Company's Volkhov complex and the improved efficiency of existing production units thanks to operational improvements. EBITDA margin for the quarter exceeded 48%.

• EBITDA in the phosphate-based fertilizers segment amounted to RUB 45.1 billion (USD 621 million), a more than threefold increase year-on-year. Higher profitability was driven by increased sales volumes on the back of high demand in global markets.
• EBITDA in the nitrogen-based fertilizer segment was RUB 16.0 billion (USD 221 million), up more than fourfold year-on-year. This growth was driven by a considerable increase in prices for nitrogen-based fertilizers in late 2021 amid the gas crisis in Europe.

Net profit adjusted for non-cash FX gain/loss for 4Q 2021 amounted to RUB 45.1 billion (USD 622 million), up from RUB 2.1 billion in 4Q 2020.

In 4Q 2021, the Company's free cash flow was RUB 22.9 billion (USD 315 million). The main source of cash flow was an increase in sales volumes of DAP/MAP and of all types of nitrogen-based fertilizers, as well as an increase in sales revenue as a result of higher average prices.

Capex in 4Q 2021 amounted to RUB 16.3 billion (USD 224 million). The principal investments were aimed at completing the construction of a large production facility in Volkhov, completing a project to increase the production of aluminium fluoride in Cherepovets and developing the ore feedstock base in Kirovsk.

As of 31 December 2021, the net debt/EBITDA ratio was 0.8x. The Company was able to decrease its debt burden thanks to higher profitability combined with effective internal cost controls. Net debt as of the end of 2021 was RUB 153.7 billion (USD 2.1 billion).

Cost of sales increased by 31.3% in 2021 mainly due to an increase in sales volumes of commercial product and higher prices for primary feedstocks.

Cash cost of production in 4Q 2021 increased by 64.4% year-on-year, which was due to a 20.8% increase in fertilizer sales volumes compared with 4Q 2020 as well as a considerable increase in prices for feedstocks, fuel and other materials and services:

• Spending on materials and services increased by 28.8% year-on-year to RUB 11.9 billion (USD 164 million) due to an increase in the cost of phosphate rock transport owing to a 9.6% increase in production year-on-year and an overall increase in prices for materials and services. Expenses for materials and services decreased by 5.4% from the 3Q 2021 partly due to the completion of scheduled maintenance on ammonia production lines at the end of the quarter.
• Costs for feedstocks increased by 162.0% year-on-year to RUB 20.0 billion (USD 276 million):
• Ammonia costs increased by 266.4% year-on-year to RUB 4.8 billion (USD 67 million) due to an increase in the price of ammonia in late 2021 amid rising production costs and shutdowns of ammonia production facilities worldwide owing to rising natural gas prices in Europe in 3Q 2021.
• Expenses for sulphur and sulphuric acid increased year-on-year to RUB 5.7 billion (USD 79 million) due to higher global prices for these products in the wake of an increase in fertilizer prices.
• Freight, port and stevedoring costs increased by 78.2% to RUB 9.3 billion (USD 128 million) due to higher transportation tariffs and seasonal growth in sales to Latin America and Europe.

Administrative expenses increased by 18.3% year-on-year to RUB 21.1 billion (USD 286 million) in 2021, while selling and marketing expenses were up by 8.7% year-on-year to RUB 6.8 billion (USD 92 million). The main drivers behind these increases were changes in payroll and social contributions associated with the indexation of employee salaries, compensation payments and changes in exchange rates.

Market outlook

The start of 2022 has been marked by continued high demand for phosphate-based fertilizers thanks to the early resumption of DAP/NPK purchases from India due to low carry-over stocks and higher subsidies for fertilizer purchases. Since the beginning of the year, India has already purchased more than 1.5 million tonnes of phosphate-based fertilizers for delivery during 1Q 2022, thus counterbalancing off-season activity in other markets. An additional factor supporting prices is the ongoing restrictions on fertilizer exports from China in favour of supplies to the domestic market.

Global urea markets are seeing a price correction in the wake of the active phase of import purchases in most major markets, while global ammonia prices remain at record highs on the back of high natural gas prices and continued import demand from Europe.

Conference call and webcast:

PhosAgro will hold a conference call and webcast today at 13:30 London time (16:30 in Moscow; 08:30 in New York).

The call will be held in English.

Webcast link:

https://www.webcast-eqs.com/phosagro20220210

Participant dial-in numbers:

Russia:

+7 495 646 1870

8 10 800 2816 5011

United Kingdom:

+44 (0)330 336 9600

0800 279 6894
United States:

+1 646-828-8082

800-281-7989

Conference ID numbers:

English: 416118

Contacts

PJSC PhosAgro

Andrey Serov, Head of the Investor Relations Department

+7 495 231 2747 ext. 2183

ir@phosagro.ru

Timur Belov, Press Officer

+7 495 231 2747 ext. 2652

pr@phosagro.ru

EM

Sam VanDerlip

vanderlip@em-comms.com

+44 207 002 7859

About Us

PhosAgro (www.phosagro.ru) is one of the world's leading vertically integrated phosphate-based fertilizer producers in terms of production volumes of phosphate-based fertilizers and high-grade phosphate rock with a P2O5 content of 39% and higher. PhosAgro's environmentally friendly fertilizers stand out for their high efficiency, and they do not lead to the contamination of soils with heavy metals.

The Company is the largest phosphate-based fertilizer producer in Europe (by total combined capacity for DAP/MAP/NP/NPK/NPS), the largest producer of high-grade phosphate rock with a P2O5 content of 39%, a top-three producer of MAP/DAP globally, one of the leading producers of feed phosphates (MCP) in Europe, and the only producer in Russia, and Russia's only producer of nepheline concentrate (according to the RAFP).

PhosAgro's main products include phosphate rock, more than 50 grades of fertilizers, feed phosphates, ammonia, and sodium tripolyphosphate, which are used by customers in 100 countries spanning all of the world's inhabited continents. The Company's priority markets outside of Russia and the CIS are Latin America, Europe and Asia.

PhosAgro's shares are traded on the Moscow Exchange, and global depositary receipts (GDRs) for shares trade on the London Stock Exchange (under the ticker PHOR). Since 1 June 2016, the Company's GDRs have been included in the MSCI Russia and MSCI Emerging Markets indexes.

More information about PhosAgro can be found on the website: www.phosagro.ru.

Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021

Consolidated Statement of Financial Position as at 31 December 2021

Consolidated Statement of Cash Flows for the year ended 31 December 2021