Earnings had been impacted by ‘decrease promoting costs, as volatility in European fuel costs continued whereas markets noticed elevated provide from capacities commissioned in 2022’. There was additionally the tip of the demand season within the northern hemisphere’.
“We’re actively implementing a number of administration initiatives aimed toward supporting our free money technology throughout cycles,” stated Ahmed El Hoshy, CEO of Fertiglobe. “Our value optimization initiatives goal $50 million in recurring annualized financial savings by the tip of 2024, with 25-30 per cent of those financial savings deliberate to be achieved this yr.”
“Our key focus areas embody working mannequin enhancements and enhancements in logistical capabilities (collectively contributing – 60 per cent of the run fee financial savings) in addition to operational value and spending efficiencies.”
Fertiglobe’s free money stream totalled $331 million as of finish June.
In Q2, nitrogen costs hit a low however have since rebounded in Q3, notably in Egypt the place urea costs surged round 60 per cent from June 2023 ranges. The restoration is pushed by a mixture of demand progress, very tight provide, and record-low inventories. Moreover, low grain shares are boosting crop futures and creating favorable farm economics, resulting in a major rise in nitrogen demand and supporting the worth restoration. Whereas new capability added in 2022 and early 2023 has been absorbed, there are restricted expectations for brand new provide additions within the subsequent 4 years. Furthermore, heat climate is growing residential cooling fuel demand and inflicting reductions in international ammonia manufacturing in some international locations.
Our total gross sales volumes had been decrease in comparison with Q2-2022, primarily as a result of a better base impact given deferrals from Q1 to Q2 final yr,” stated El Hoshy. “Nevertheless, going into H2-2023, we’re well-positioned to service demand rising from key areas, leveraging our centralized distribution capabilities and focusing on demand facilities that provide the very best netbacks, additional supported by the reinstatement of urea and ammonia import duties into Europe.”