ABU DHABI, 2nd August, 2022 (WAM) — Fertiglobe, the strategic partnership between ADNOC and OCI, today reported that its Q2 2022 revenues increased 105% to $1,471 million, while adjusted EBITDA grew 155% to $770 million compared to Q2 2021.
Free cash flow increased to $789 million in Q2 2022 from $328 million in Q2 2021, supporting a first-half dividend of $750 million, above previous guidance of at least $700 million.
Ahmed El-Hoshy, Chief Executive Officer of Fertiglobe, commented, “Q2 2022 marks another quarter of solid performance, driven by a favourable price backdrop supported by strong in-season demand, tight market balances and elevated gas prices in Europe, as well as higher sales volumes due to a phasing of some shipments from Q1 2022 to this quarter. We are pleased to announce an H1 2022 dividend of $750 million, above our previous guidance of at least $700 million, driven by strong earnings, healthy cash conversion and our robust capital structure.
We are also delighted to receive investment grade credit ratings by three rating agencies: S&P (BBB-), Moody’s (Baa3) and Fitch (BBB-), supported by an attractive cash flow profile and a prudent financial policy. We were also pleased to be included in the FTSE Emerging Market Index in June 2022, and, in March 2022, the FTSE ADX 15 Index, representing the 15 largest and most liquid companies on the Abu Dhabi Securities Exchange.
The outlook for the fundamentals of our nitrogen end markets continues to be underpinned by tight supply, healthy farm economics and low grain stocks globally that incentivise using nitrogen fertilisers. Forward curves imply that natural gas prices in Europe will remain at elevated levels through 2023 and beyond, setting breakeven pricing well above historical average global prices for ammonia and urea.
We continue to focus on operational excellence and utilising our young, world-scale production assets efficiently while fully capitalising on global supply chains – in partnership with OCI – to capture the highest netbacks. We aim to fill any supply gaps to help address global food security concerns, supported by our position as a leading producer and largest seaborne exporter globally of essential nitrogen fertiliser products.
Fertiglobe’s low leverage positions the company favourably to selectively pursue value-creative growth opportunities, including organic expansions below replacement cost, capitalising on the emerging demand for low-carbon ammonia as a solution to decarbonise industries that make up around 90% of current global greenhouse gas emissions.
Finally, I would like to thank the Fertiglobe team for their continued focus on safety and commitment to delivering best-in-class performance. We look forward to continuing to deliver on our strategy and create value for all our stakeholders.”
Nitrogen prices have support to remain above historical averages, driven by structurally tight supply over 2022-2026, crop fundamentals supporting demand, and elevated gas prices. Fertiglobe’s assets are favourably positioned on the global cost curve, and the company is benefitting from a higher global gas price environment. Fertiglobe has a significant competitive advantage with favourable gas price supply agreements, including fixed prices in Abu Dhabi and profit-sharing mechanisms in North Africa.
Fertiglobe’s dividend policy is to substantially pay out all excess free cash flows after providing growth opportunities, while maintaining investment grade credit ratings. Given the company’s free cash generation, Fertiglobe announced cash dividends of $750 million for H1 2022, above previous guidance of at least $700 million. The dividend will be presented to shareholders for approval and payable in October 2022.
Fertiglobe’s potential for attractive future dividends is supported by its strong cash flow performance and competitive position on the global cost curve. Strong earnings and cash generation during the quarter resulted in a net cash position of $445 million as of 30th June 2022, compared to net debt of $487 million as at 31st December 2021 (0.3x net debt / adjusted EBITDA), supporting future growth and attractive dividend pay-outs.