Acron (RTS, MICEX and LSE: AKRN) today released its consolidated audited IFRS results for 2008.
IFRS Financials for 2008
- The Group’s revenue was up 39% year-on-year to reach RUB 43.13 billion, against RUB 31.11 billion in 2007.
- EBITDA* totalled RUB 17.48 billion, up 104% year-on-year (2007: RUB 8.59 billion).
- EBITDA margin was recorded at 41%, against 28% in 2007.
- Net profit was RUB 9.89 billion, up 75% year-on-year (2007: RUB 5.67 billion).
- Earnings per ordinary share grew 84% to RUB 214.4, against RUB 116.1 in 2007.
*EBITDA is calculated as operating profit plus depreciation and amortization.
- Ammonia and mineral fertiliser output (less the Group’s own consumption) totalled 3.6 million tonnes in 2008. Ammonia output was down 12% year-on-year; complex fertiliser production slipped 25%; straight nitrogen fertilisers were up 3%.
- Output of organic and non-organic compounds (less the Group’s own consumption) declined 8% year-on-year to 1.2 million tonnes.
Major Acquisitions in 2008
- Verkhnekamsk Potash Company (VPC), a subsidiary of Acron, obtained a subsoil license for the Talitsky area of the Verkhnekamsk potassium-magnesium salts deposit. VPC paid RUB 16.8 billion for the license.
- Over the year, the Group injected an equivalent of RUB 1.5 billion into the equity of Canadian-based 101109718 Saskatchewan Ltd. in exchange for 98% interest in the company’s capital. 101109718 Saskatchewan Ltd. used these funds to pay for potash permits in Canadian Saskatchewan, where it plans to proceed with exploration.
- In August 2008, the Group acquired 50% of ordinary shares in Estonian AS Dry Bulk Terminal (a terminal facility in Muuga port) for a cash consideration equivalent to RUB 547 million.
Alexander Popov, Chair of Acron’s Board of Directors, comments on the Group’s performance:
“While 2008 marked tremendous financial and operational success for the Group as it took advantage of opportunities for further growth, Acron also faced major challenges amid the global financial crisis.
“I believe our key achievement this year was building a fully vertically integrated business, including mining, processing, logistics and distribution. We won the potash license and started construction of the phosphate mine at Oleniy Ruchey. Last year, we launched a liquid fertiliser transshipment terminal and acquired a dry bulk terminal in Estonia. We added our own international trader to our distribution network and built an expansive distribution system in China. These transformations laid a strong foundation for the Group to weather the crisis and sustain its growth in the future.
“In 2008, the Group strengthened its position in a new role as a public company. Its shares were listed at the Russian RTS and MICEX stock exchanges and at the London Stock Exchange. We saw strong interest in our company from Russian and international investors in the capital markets, which opens up new opportunities for raising capital as soon as the financial markets stabilize.
“Despite the deteriorating market in Q4, the Group’s financial performance hit record levels, enabling Acron to pay RUB 3.8 billion in dividends to its shareholders in Q1 and H1.
“We realize that the year ahead is going to be challenging. With the spring planting season underway, fertiliser demand has stabilised, but prices are still at 2006-2007 levels. Demand for organic and non-organic compounds is slipping. However, we believe this trend is temporary and expect demand to rebound in H2 2009. The Group plans to run its capacities at an average load of 80% throughout the year, which will enable our facilities to operate in a stable manner without interruptions.
“In this challenging market environment, we have to adjust our growth strategy. We still plan to invest in further enhancement of our vertical integration, including construction of the Oleniy Ruchey phosphate mine and construction of an ammonia transshipment terminal in Estonian Sillamäe. Another priority is strengthening the Group’s positions in its key markets. Demand is still high in Russia and China, and we are striving to build up our sales by developing our own distribution capability and offering higher value to the customers.
“Acron is focused on controlling and efficiently managing costs. Furthermore, the Group aims to makes its product portfolio and its capacities more flexible to reflect changing market demand. We have already decided to cut back on our investment program, reducing the scope or postponing some of our expansion initiatives. We plan to continue with only those projects we believe to be of strategic importance, as well as projects with a short payback period. Before adding any more capacity, we will look at market trends and study trends in demand for fertilisers and other products.
“Debt refinancing is an important strategic task right now. As of the end of 2008, Acron’s aggregate bank debt totalled approximately USD 1 billion. In 2009, we are working to refinance our loan portfolio and improve its structure. We already have agreements in place to refinance debt worth over USD 400 million out of our total USD 630 million short-term debt .”
|Profit and Loss Statement|
|Revenue (RUB mn)||43,131.6||31,105.2||39|
|Cost of sales (RUB mn)||(19,771.2)||(18,943.5)||4|
|EBITDA (RUB mn)||17,475||8,585.8||104|
|Operating profit (RUB mn)||16,139.1||7,576.2||113|
|Net profit (RUB mn)||9,891||5,668.3||75|
|Net profit per share (RUB)||214.41||116.10||84|
|Loans and borrowings payable||28, 823.2||5,499.1||424|
|Cash and cash equivalents||4,008.8||1,335.3||200|
|Cash flow from operations||10,167.3||5,584.2||127|
Note: The exchange rate used for currency translations was RUB 29.3804 to USD 1 as of December 31, 2008; and RUB 24.5462 to USD 1 as of December 31, 2007. Average exchange rate was RUB 24.8740 to USD 1 in 2008, and RUB 25.5516 to 1 USD in 2007.