Investor call

Pétfürdő, June 6, 2019 - Nitrogénművek Zrt. held its regular bond investor call on 4th of June. The company gave an overview of the results of the previous year and also of the current industry environment.

  • The unfavourable industry environment in 2018 influenced the efficiency of European fertilizer manufacturers. Nitrogénművek Zrt. achieved EBITDA of HUF 6,136 million, which is significantly lower than in 2017 (HUF 12,363 million).
  • Production volume dropped to 1,009 million tons due to one-off unplanned maintenance, which weakened the efficiency.
  • Following the intensive investment cycle of the past period (from 2013 HUF 98,730 million), CAPEX fell to HUF 1,223 million, which is expected to remain at this low level in the coming years.
  • The company's USD 200 million bond was redeemed before maturity and refinanced with a new 7 years EUR 200 million bond to secure long-term funding.
  • The liquidity of Nitrogénművek Zrt. remained strong at the end of the year with HUF 16,032 million cash reserve.
  • The company's sales amounted to HUF 95,829 million, a slight increase compared to the previous year (HUF 91,132 million).

The unfavourable industry environment (high natural gas prices, stagnant fertilizer prices) with further unplanned maintenances weakened the performance. The complex technology investments of the past period, in addition to capacity expansion and specific efficiency improvement, also posed significant risks to the operation. These risks have dropped significantly after the completion of the investments and implementation of necessary technological modifications. The management of the company expects stable operation in the coming years.

Strategic director Zoltán Bige said that the fundamentals of the industry are strong, which supported the investment decisions in previous years. The strong cyclicality of the industry is well known, so they are well prepared for it. The recovery of the market has started, which is already significantly improving the first quarter figures. Sales prices for nitrogen fertilizer in the first quarter rose on average by 17% compared to the same period last year. The price of natural gas decreased by 7%, resulting in a 40% increase of EBITDA.

Zoltán Bige highlighted that in the coming period, improving debt ratios is an important target. The current 12.4 times net debt to EBITDA ratio is expected to fall below level 3X by 2021. The significant improvement is supported by the increase in positive free cash flow and improved profitability through completed and operating investments.