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Acron Releases 2009 IFRS Consolidated Financial Statements

RIS Today Acron (RTS, MICEX and LSE: AKRN) released its consolidated audited IFRS results for 2009.

IFRS Financials

• The Group’s revenue was down 13% year-on-year to RUB 37,542 million, against RUB 43,132 million in 2008.
• EBITDA1 totalled RUB 7,275 million, down 58% year-on-year (2008: RUB 17,371 million).
• EBITDA margin was posted at 19%, against 40% in 2008.
• Net profit was RUB 7,256 million, down 27% year-on-year (2008: RUB 9,891 million).
• Net debt was RUB 24,725 million, down 1% against RUB 24,915 million at the end of 2008.

Note: The exchange rate used for currency translations was RUB 30.2442 to USD 1 as of December 31, 2009 and RUB 29.3804 to USD 1 as of 31 December 31, 2008. The average exchange rate was RUB 31.7669 to USD 1 in 2009 and RUB 24.8740 to USD 1 in 2008.

Operating Results

• Total sales totalled 5,346,000 tonnes, up 13% year-on-year.

• Ammonia and mineral fertiliser sales increased 25% year-on-year to 4,442,000 tonnes.

• Sales of organic and non-organic compounds declined 24% year-on-year to 904,000 tonnes.

Financial Performance Analysis

Revenues declined due to lower fertiliser prices on the global market; however, this was partially offset by the 13% increase in sales and the 28% decrease in the average RUB/USD FX rate.

In the reporting year, the EBITDA margin went down to 19% fr om 40% in 2008 as a result of both lower profitability at the Russian facilities and Hongri Acron’s significant loss of RUB 1.2 billion in 2009 due to impairment of raw material inventories, as well as the fertiliser price decline in China.

In 2009, the lower net profit figure of the core business was offset by the sale of a non-core asset, a 21% stake in Sibneftegaz. This allowed the Group to mitigate to some extent its reduced net profit. In addition, bottom line was affected by excluding capitalised interest accrued on a loan to Verkhnekamsk Potash Company for a potash license.
The company’s net debt decreased, therefore the Group maintain a positive cash flow while continuing to invest heavily.

Alexander Popov, Chair of Acron’s Board of Directors, comments on the Group’s performance:

“As we wind up 2009 reporting I want you to know that Acron Group has withstood the durability test and has demonstrated the sustainability of its business model and the effectiveness of management’s decisions in reaction to the worsened conditions of the domestic and global economic environment. Our solid financial performance in 2009 proves that fertiliser industry has strong fundamentals.

“Our 2010 efforts will focus on improving business efficiency and profitability at all stages of value chain.

“Our operating plan includes maintaining at least a 90% capacity utilisation rate and increasing sales of high value-added products. Because of steps taken to improve efficiency at Hongri Acron, the Group hopes this company will post a positive financial result in 2010.

“This year, we will continue streamlining the Group’s credit portfolio. As the capital market stabilises, the Group’s improved liquidity and creditworthiness will favourably affect the corporate debt structure.

“In 2010, the Group will remain committed to its investment objective of promoting vertical integration. In the current year we will invest heavily in the phosphate projects of North-Western Phosphorous Company, scheduled for commissioning in early 2012.

“The global mineral fertiliser market has been vigorously rebounding, which has had a positive impact on the company’s financials. This supports our expectation that generated cash flow will be sufficient to implement the investment programme and meet our creditor and shareholder obligations.”

1In the reporting year the Group changed its EBITDA calculation principle (for IFRS statements) to comply with definitions envisaged by several loan agreements, wh ere EBITDA is operating profit adjusted for depreciation and amortisation, exchange rate gain/loss and other non-cash and extraordinary items.

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A detailed analysis of the Group’s 2009 performance is presented in its 2009 annual report, a draft version of which will become available at on April 30, 2010.