Financial performance

With global fertilizer prices going back to normal from the peak levels of 2022, PhosAgro Group once again delivered strong financial performance in 2023. It was driven by both growth of sales volumes (especially in the segment of high‑margin products) and effective cost control, with cost reduction coming primarily on the back of the investment programme successfully implemented in the previous years.

In the reporting year, the Company’s revenue went above RUB 440 bln, EBITDA reached RUB 183 bln, and adjusted net profit came in at RUB 104 bln. Even though this constituted a decline compared to 2022 with its historically high global fertilizer prices, these results are nonetheless among the strongest on record. Another highlight was the EBITDA margin, which remained at a very high level of over 40%.

In 2023, the Company had a free cash flow of more than RUB 70 bln, driven by continuously high capital investments and additional liquidity outflows associated with the payment of newly introduced export duties and the year‑end transfer of RUB 6.4 bln as an advance payment towards the excess profit tax liabilities.

Robust financial position, capital investments without budget overruns, and a strong free cash flow enable us to fully meet all our debt obligations (including those denominated in foreign currencies) in a timely manner. As at the end of 2023, PhosAgro’s leverage remained at a comfortable level, with net debt standing at RUB 223.2 bln and the net debt/EBITDA ratio coming in at 1.2x. The share of USD‑denominated debt also continued to decline.

The high credit quality of the Company was further confirmed by the success of two exchange‑traded bond issues (for CNY 2 bln and RUB 20 bln), which helped, among other things, replace more than 74% of the two remaining PHOR‑25 and PHOR‑28 Eurobond issues for a total amount of USD 740.4 mln

Alexander Sharabaika Deputy CEO for Finance and International Projects at PhosAgro
Alexander Sharabaika
Key external drivers of financial results

In addition to increased sales volumes and continuously competitive cost levels, the strong financial results in 2023 were driven by the following market events:

Significant increase in mineral fertilizer consumption, primarily in Latin America, Africa, South Asia and Oceania, due to a good fertilizer/crop price ratio, favourable weather conditions in key markets, and stronger government support for agriculture

Growth of global crop prices underpinned in part by the growing demand for forage crops, which itself was partially caused by the recovery of hog production in China after the swine flu epidemic in 2018–2019

Restrictions on exports of phosphate‑based fertilizers from China to bolster domestic supply and introduction of fertilizer export quotas in Russia

Fertilizer affordability issues caused by supply disruptions and an increase in raw materials prices

Revenue analysis

In 2023, revenue decreased by 23% y-o-y to RUB 440 bln (USD 5.23 bln) due to the correction of global fertilizer prices after the record high levels recorded in 2022.

Financial and operational highlights, RUB mln
Item 2021 2022 2023 Δ 2023/2022,%
Financial highlights, rub mln
Revenue 420,488.00 569,527.00 440,304.00 (22.70)
EBITDA 191,810.00 257,879.00 183,038.00 (29.00)
Adj. EBITDA Adjusted EBITDA is calculated as operating profit adjusted for depreciation and amortisation less foreign exchange gain or loss from operating activities. 192,117.00 266,947.00 168,352.00 (36.90)
Adj. EBITDA margin, % 45.70 46.90 38.20
Net profit 129,674.00 184,714.00 86,141.00 (53.40)
Adj. net profit Adjusted net profit means net profit less net foreign exchange gain or loss from operating and financing activities. 130,512.00 182,297.00 104,105.00 (42.90)
Adj. free cash flow Adjusted free cash flow is calculated as cash flows from operating activities less cash flows from investing activities, adjusted for the outflow of cash and cash equivalents as result of a loss of control over foreign subsidiaries. 77,857.00 141,024.00 70,208.00 (50.20)
Item 31.12.2021 31.12.2022 31.12.2023 Δ 2023/2022,%
Net debt 153,718.00 180,338.00 223,207.00 23.80
12M net debt / EBITDA 0.80 0.70 1.22
Sales volume, kt 2021 2022 2023 Δ 2023/2022,%
Phosphate‑based fertilizers and feed phosphates 7,762.40 8,402.80 8,578.20 2.10
Nitrogen‑based fertilizers 2,494.50 2,550.80 2,560.50 0.40
Total fertilizers 10,256.90 10,953.60 11,138.70 1.70
Other products 226.90 179.50 214.80 19.70
Total fertilizers and other products 10,483.80 11,133.10 11,353.50 2.00
Revenue breakdown by key product, RUB bln
Item 2021 2022 2023 Δ 2023/2022,%
Phosphate and nitrogen‑based products 404.9 551.0 421.7 (23.5)
Other 15.6 18.5 18.6 0.5
Total 420.5 569.5 440.3 (22.7)
Operating costs analysis
Cost of sales, RUB mln
Item 2021 2022 2023 Δ 2023/2022,%
Depreciation and amortisation 24,812 26,979 29,374 8.9
Materials and services 47,084 54,178 65,738 21.3
  • Phosphate rock transportation
9,105 11,610 13,468 16.0
  • Repair
11,373 12,002 15,865 32.2
  • Toll processing
‑ ‑ 4,341 100.0
  • Drilling and blasting
3,486 3,217 3,101 (3.6)
  • Other materials and services
23,120 27,349 28,963 5.9
Raw materials 63,534 108,323 63,335 (41.5)
  • Ammonia
14,277 19,550 11,533 (41.0)
  • Sulphur and sulphuric acid
17,707 40,798 11,507 (71.8)
  • Potassium
16,574 27,418 22,444 (18.1)
  • Natural gas
12,635 14,226 15,033 5.7
  • Ammonium sulphate
2,341 6,331 2,818 (55.5)
Salaries and social contributions 15,286 19,667 26,265 33.5
Electricity 6,740 6,754 7,317 8.3
Fuel 5,578 6,459 5,754 (10.9)
Products for resale 12,725 15,599 16,056 2.9
Customs duties 2,483 1,420 13,207 >100
Freight, port and stevedoring expenses 28,587 16,382 9,924 (39.4)
Russian Railways and operators’ fees 10,728 12,647 14,047 11.1
Other 1,250 610 599 (1.8)
Total 218,807 269,018 251,616 (6.5)

In 2023, cost of sales went down by 6.5% to RUB 251.6 bln.

This was mainly due to lower raw material expenses (down 41.5% y‑o‑y to RUB 63.3 bln) and freight, port and stevedoring costs (down 39.4% y‑o‑y to RUB 9.9 bln).

Adjusted EBITDA
Adjusted EBITDA in 2023 vs actual 2022, RUB bln

Adjusted EBITDA to adjusted FCF conversion in 2023, RUB bln

Adjusted EBITDA
Adjusted free cash flow

In 2023, the Company’s adjusted free cash flow exceeded RUB 70 bln, marking a 50% decrease compared to 2022.

Capital investments (including capitalised repairs) for the year amounted to RUB 64 bln and were mainly focused around completing the construction of a large production facility in Volkhov, developing the ore and raw material base in Kirovsk, developing production capacities in Balakovo, and maintaining production facilities across all process stages, from mining and processing of raw materials to producing finished products.

Debt

Net debt as at 31 December 2023 increased y‑o‑y to RUB 223 bln. Depreciation of the rouble against the US dollar in 2023 and reassessment of the Company’s foreign currency debt using the year‑end exchange rate had a significant impact on the RUB‑denominated debt amount. With a decline in EBITDA, the net debt / adjusted EBITDA ratio increased to 1.33x as at 31 December 2023 from 0.68x a year earlier.

Loans and borrowings breakdown by rate type as at 31 December 2023, %
Loans and borrowings breakdown by currency as at 31 December 2023, %
Debt maturity profile, RUB bln
Item 2024 2025 2026 2027 2028 Total
Unsecured bank loans Debt amount under unsecured bank loans does not include the bank fee of RUB 6 mln. 84.6 8.5 16.1 2.7 – 111.9
Bonds Bond debt amount does not include the bank fee of RUB 355 mln – 44.8 45.2 – 44.8 134.8
Interest payable 1.8 – – – – 1.8
Total debt 86.4 53.3 61.3 2.7 44.8 248.5
Tax policy
GRI 3‑3, 207‑1, 207‑2, 207‑3

In 2023, the Board of Directors approved a new version of PhosAgro’s Tax Strategy. The approach to taxation was developed in accordance with the Company’s Strategy to 2025 and combines social responsibility for developing and maintaining the well‑being of regions across PhosAgro’s footprint, minimising tax litigation risks, and maximising the use of the Company’s leverage toolkit stipulated by law for actively investing companies, in particular Investment Protection and Promotion Agreements (IPPAs) and Special Investment Contracts (SPICs).

Our approach to tax management, participation in shaping government tax policy, and organisational arrangements pertaining to the exercise of tax functions at PhosAgro is described in the Company’s Tax Strategy.

Country‑by‑country reporting, RUB mln
GRI 207‑4
Tax jurisdiction Unrelated party revenue Revenue from intra‑group transactions with other tax jurisdictions Profit/(loss) before income tax Income tax paid (cash basis) Income tax paid includes windfall tax security payment in the amount of RUB 6,355 mln. Income tax accrued Tax rates effective in any given jurisdiction apply to profit/loss before income tax. Reasons for the difference between corporate income tax accrued on profit/loss and the tax due if the statutory tax rate is applied to profit/loss before tax are as follows:
— intercompany transactions elimination;
— provisions accrued in accordance with IFRS (mostly allowance for expected credit losses);
— reduction in tax rate for certain Russian;
— foreign entities items which are not deductible or assessable for taxation purposes;
— other differences (including the 2023 excess profit tax in the amount of RUB 6,355 mln). 		Statutory tax rate For the Russian tax jurisdiction, an average statutory tax rate is used. , % Average headcount, people Tangible assets other than cash and cash equivalents Total employee remuneration Intra‑group loans received
2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023
Russian Federation 131,527 440,639 440,304 250,534 106,420 ‑ 11,877 157,360 114,603 28,471 41,393 36,132 29,875 39,932 34,527 20.00 20.00 20.00 18,198 19,846 21,839 274,386 320,961 367,857 34,039 55,318 53,745 67,069 103,233 137,911
Switzerland 221,961 96,268 ‑ 63,188 27,436 ‑ 112,008 57,850 ‑ 137 331 ‑ 742 764 ‑ 12.05 12.05 – 32 36 ‑ 4,725 ‑ ‑ 1,723 528 ‑ ‑ ‑ ‑
Cyprus ‑ ‑ ‑ 8 4 ‑ (598) (4,243) ‑ ‑ 2 ‑ ‑ 2 ‑ 12.50 12.50 – 28 30 ‑ 14 ‑ ‑ 201 57 ‑ 2,237 ‑ ‑
Poland 14,916 8,088 ‑ ‑ ‑ ‑ 7,253 4,943 ‑ 59 48 ‑ 84 235 ‑ 19.00 19.00 – 15 15 ‑ 1,705 ‑ ‑ 121 55 ‑ ‑ ‑ ‑
Germany 10,423 7,446 ‑ ‑ ‑ ‑ 6,381 5,242 ‑ 7 2 ‑ 60 129 ‑ 32.27 32.27 – 7 7 ‑ 466 ‑ ‑ 97 33 ‑ ‑ ‑ ‑
France 15,833 7,045 ‑ ‑ ‑ ‑ 10,887 5,541 ‑ ‑ 5 ‑ 93 94 ‑ 26.50 25.00 – 6 6 ‑ 578 ‑ ‑ 85 58 ‑ ‑ ‑ ‑
Serbia 4,752 2,020 ‑ 230 58 ‑ 2,060 1,063 ‑ (1) 1 ‑ 89 65 ‑ 15.00 15.00 – 12 14 ‑ 1,443 ‑ ‑ 54 28 ‑ 337 ‑ ‑
Lithuania 9,838 1,598 ‑ ‑ ‑ ‑ 5,075 1,038 ‑ 28 26 ‑ 31 ‑ ‑ 15.00 15.00 – 4 4 ‑ 7 ‑ ‑ 67 20 ‑ ‑ ‑ ‑
Romania 4,681 4,050 ‑ ‑ ‑ ‑ 1,213 1,916 ‑ 5 ‑ ‑ 6 63 ‑ 16.00 16.00 – 5 7 ‑ 1,019 ‑ ‑ 25 14 ‑ ‑ ‑ ‑
South Africa 6,452 2,343 ‑ ‑ ‑ ‑ 4,046 1,643 ‑ 79 ‑ ‑ 85 174 ‑ 28.00 28.00 – 2 2 ‑ 338 ‑ ‑ 18 10 ‑ 502 ‑ ‑
Finland 105 29 ‑ ‑ ‑ ‑ (7) (2) ‑ 12 3 ‑ 12 3 ‑ 20.00 20.00 – 1 1 ‑ 677 ‑ ‑ 8 2 ‑ ‑ ‑ ‑
Brazil ‑ ‑ ‑ ‑ ‑ ‑ (86) (42) ‑ (5) ‑ ‑ (5) 4 ‑ 34.00 34.00 – 7 7 ‑ 2 ‑ ‑ 58 32 ‑ ‑ ‑ ‑
Singapore ‑ ‑ ‑ ‑ ‑ ‑ (55) (13) ‑ 13 ‑ ‑ ‑ ‑ ‑ 17.00 17.00 – 3 3 ‑ 7 ‑ ‑ 25 8 ‑ ‑ ‑ ‑
Total 420,488 569,527 440,304 313,961 133,918 0 160,055 232,297 114,603 28,806 41,811 36,132 31,073 41,465 34,527 285,368 320,961 367,857 36,522 56,163 53,745 70,146 103,233 137,911