Uralkali Announces IFRS FY 2019 Financial Results


Uralkali (“the Company”, Moscow Exchange: URKA), one of the world’s largest potash producers, today has published its financial statements1 for 2019 prepared in accordance with IFRS, audited by AO Deloitte & Touche CIS and approved by the Company’s Board of Directors.


  • Revenue up 1% y-o-y to US$ 2,782 million
  • Net revenue2 up 4% y-o-y to US$ 2,364 million
  • EBITDA3 up 8% y-o-y to US$ 1,578 million
  • EBITDA margin4 is 67%
  • Cash COGS5 is US$ 43.8 per tonne
  • Average FCA export price up 11% y-o-y to US$ 235 per tonne of potassium chloride (KCl)


  • Production volume down 3% y-o-y to 11.1 million tonnes of KCl
  • Sales volume down 12% y-o-y to 9.8 million tonnes of KCl


  • In June the Company signed a pre-export facility with 13 international banks for tranches of US$ 725 million and EURO 650 million. The interest rate is LIBOR plus a 190 bps margin for the US$ tranche and EURIBOR plus a 170 bps margin for the EURO tranche with a loan maturity of 5 years. The loan was used for refinancing of Uralkali’s existing loans and general corporate purposes
  • In June Uralkali’s AGM decided not to pay dividends on the outstanding common registered shares of Uralkali for 2018, to pay dividends on the outstanding preferred shares of the Company in the amount of RUB 0.1 per preference share. The decision regarding the payment of minimal dividends on the outstanding preferred shares was recommended by the Board of Directors in order to support the current balance of voting and non-voting shares of the Company and thereby ensure that the current percentage of voting shares of the minority shareholders of Uralkali is preserved
  • In October the Company successfully placed its US$ 500 million Eurobond offering maturing in 2024 with an annual coupon rate of 4%, reflecting strong demand from high-calibre global institutional investors, including those from the US, the UK and Europe.

Dmitry Osipov, Uralkali CEO, commented:

A decrease in demand for potassium chloride in 2019, across almost all consumption regions, did not significantly affect Uralkali’s main financial indicators, largely due to our quick response to changes in the market environment.

Industry fundamentals remain strong, and demand in a number of key markets will begin to gradually recover in 2020. At the end of this year, we expect a potash consumption growth compared to the reporting period.

The key figures are as follows:



Revenue (US$ million)



Net revenue (US$ million)



EBITDA (US$ million)



EBITDA margin



Foreign exchange differences and fair value gains / (losses) on derivative financial instruments (US$ million)



Net profit / (loss) (US$ million)



Average export potash price, FCA, (US$)



Production (KCl, million tonnes)



Sales volume (KCl, million tonnes)


— Domestic

— Export









Financial review

In 2019, the Company’s net profit amounted to US$ 1,207 million, compared to a net loss a year earlier. This improvement was affected by an 8% increase in EBITDA, accompanied by foreign exchange gain and gains on revaluation of derivatives as compared to foreign exchange losses in 2018.

Uralkali’s cash COGS excluding goods for resale was US$ 43.8.

In 2019, the average export potash price per tonne on FCA basis amounted to US$ 235, an 11% growth year-on-year, due to price changes in international potash markets.

The decrease in sales of potash fertilisers in 2019, compared to the previous year, was mainly explained by high supply and insufficient demand in the world market.

As of the end of December 2019, the Company’s net debt amounted to US$ 4,837 million.

As of the end of 2019 the ratio of net debt/EBITDA amounted to 3.07x, while Uralkali’s average interest rate for its loan portfolio for 2019 was 4.50% in US$ and 1.64% in Euro.

Operational review

Uralkali continues its investment programme aimed at production expansion, with the following main projects:

  • Construction of the Ust-Yayva mine, with a continued construction of a surface complex; completed power facility construction; shaft construction close to completion; design of an underground complex
  • Construction of the new Solikamsk-2 mine, with continued shaft sinking and starting construction of surface facilities
  • Expansion of the Solikamsk-3 mine, with construction of surface facilities underway
  • Construction of the Polovodovsky potash plant, with preparatory work for shaft sinking

The Company continues to comprehensively monitor the situation at Berezniki-1 and Solikamsk-2 and backfill the mined-out areas at all operating mines. All activities are being carried out as planned and according to the schedule.

Market review6

In 2019, the global potash market conditions were relatively challenging across the industry.

The combination of such factors as insufficient demand due to the absence of a Chinese seaborne contract in the second half of the year, the delayed signing of a contract with Indian customers, low demand in the major markets of Southeast Asia, destocking in key markets during the second half of the year, had adverse impact on global potash demand.

In 2019, Brazil was the most active spot market. According to the Brazilian National Fertilizer Association, potash imports to Brazil increased by 2% in 2019 compared to the previous year, and totalled about 10.2 million tonnes, as a result of surging Chinese demand for Brazilian soybeans. In spite of good demand, ample supply amid weak potash demand in other major markets of granular potash, was the key factor of potash price softening in Brazil.

The US market has been under downward price pressure, as weak demand due to unfavourable weather conditions resulted in building up of potash inventory which led to decrease of potash prices as compared to the beginning of the year.

In Europe, potash demand and prices have come under downward pressure due to intense competition and softening prices in other key markets of standard and granular products.

Major markets in Southeast Asia remained slow amid palm oil producers’ profitability/liquidity concerns.

Given lackluster demand trends in Southeast Asia amid record-low palm oil futures, the bulk of potash volumes were reallocated to China. The combination of ongoing high import volumes and insufficient demand from end-consumers led to accumulation of port inventories which reached historical records. As a result, China has suspended seaborne deliveries after September 2019.

India delayed signing new contracts until the start of the fourth quarter due to sufficient potash inventories. Uralkali was the first supplier to agree on the contract price and sign a supply agreement with Indian Potash Limited (IPL).

Domestic sales in 2019 totalled 2.4 million tonnes, which is 9% lower than in 2018, because of a decline in purchase volumes from producers of complex mineral fertilisers, in particular due to the launch of Eurochem’s own production facilities.

In the difficult market context, Uralkali announced a decrease in production in Q4 2019.

According to the Company estimates, global potash demand decreased to 63-64 million tonnes in 2019, compared to 66 million tonnes in 2018.

Potash demand outlook for 2020 is cautiously optimistic. In 2020, global potash sales are expected to increase to 65-66 million tonnes compared to 2019, mainly due to expected rebound in the major markets of Southeast Asia, the USA and Central America, and good demand in Brazil.

Uralkali (www.uralkali.com) is one of the world’s largest potash producers and exporters. The Company’s assets consist of 5 mines and 7 ore treatment plants in the towns of Berezniki and Solikamsk (Perm Region, Russia). Uralkali employs more than 12,000 people in the main production unit. Uralkali’s shares are traded on the Moscow Exchange.

1 The audited consolidated financial statements may be found on Uralkali’s website http://www.uralkali.com/investors/reporting_and_disclosure/uk_msfo/

2 Net Revenue is revenue net of freight, railway tariff, rental of railway cars and transshipment cost

3 EBITDA is calculated as Operating Profit adjusted for depreciation of property, plant and equipment and right-of-use assets, amortisation of intangible assets, impairment and gain/(loss) on non-recurrent write-offs of non-current assets, as well as unplanned contributions and social expenses

4 EBITDA margin is calculated as EBITDA divided by Net Revenue

5 Excluding goods for resale

6 Sources: Uralkali’s estimates, the IFA data, customs statistics, financial statements of potash producers

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Cardinal rules

Smoking in mines is prohibited.
Work at heights without wearing a safety harness is prohibited.
Work in electrical installations under voltage is prohibited.
It is forbidden to perform work and stay in the bottomhole zone during the operation of the mining machine.
Loading and unloading operations when people are in the danger zone are prohibited.
Working in underground mines with unsecured and/or unassembled roofing is prohibited.
It is forbidden to carry out repairs and maintenance of conveyors without disconnecting from energy sources, use of conveyors for transfer of people and goods (materials and/or equipment), crossing (either above or under) operating conveyors by employees are not allowed.
It is forbidden to carry out welding and flame work in underground mines and mine buildings without the necessary safety measures preventing fire.