May 30, 2018 / 10:19 AM / 6 months ago

Russia's Phosagro core earnings up 13 percent on price recovery

MOSCOW (Reuters) - Russian fertilizer producer Phosagro (PHOR.MM) reported a 13 percent rise in first-quarter core earnings on Wednesday to 14.3 billion roubles ($229 million) citing a recovery in fertilizer prices.

Prices on the global market in the first quarter were supported by a deficit on the North American market, caused by a pause in production at a plant run by one of the company’s main competitors, U.S. firm Mosaic MOS.N., Phosagro said.

It said it was confident about the outlook for prices in the second quarter, expecting strong demand in India and Brazil.

“The year-on-year improvements in earnings before interest, taxation, depreciation and amortization (EBITDA) and free cash flow generation... give us a high degree of confidence that the company has passed the bottom in terms of profitability,” Chief Executive Andrey Guryev said.

The company said it was also optimistic about the Russian market, saying it expected a high degree of activity in the second and third quarters of the year.

Phosagro’s Moscow-listed shares were up 1.3 percent on the day by 1045 GMT, outperforming the broader market .IMOEX, which was up 0.7 percent.

But analysts at BCS Global Markets said Phosagro’s results missed their expectations due to rising expenses particularly in gas and transportation.

“Results are materially weaker than expected due to higher than expected costs, which are likely to continue in future,” BCS analyst Oleg Petropavlovsky said.

Phosagro’s first quarter net profit was down 44 percent compared to the first three months of 2017, falling to 6.9 billion roubles, the company said in a statement.

Revenue rose 23 percent year-on-year to 54.6 billion roubles, mainly off the back of increased fertilizer sales, the company said.

Reporting by Polina Ivanova; Editing by Maria Kiselyova and Edmund Blair

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