Uralkali cut its profit by 40%

but expects a rise in potash prices this year.
"Uralkali" reduced its net profit last year by 38%, to $ 875 million, due to exchange rate differences, while showing revenue growth, EBITDA, as well as debt reduction. The managers of the company expect the growth of prices for potassium this year. In particular, as part of the new annual contract with China, Uralkali expects prices to increase by more than 10%.

The net profit of Uralkali last year was $ 875 million, having decreased by 38% compared to the level of 2016 ($ 1.4 billion), the company reported in its IFRS statements. In the company, a sharp drop in net profit is attributed to the effect of exchange rate differences, as well as to the revaluation of derivative financial instruments. The company's revenue increased by 21%, to $ 2.76 billion. The company's net debt was $ 5.4 billion, which is equivalent to four EBITDA. EBITDA grew by 13.2% year-on-year, to $ 1.34 billion.

"Restoration of the global potash market allowed the company to increase production and sales volumes compared to 2016, which in turn had a positive impact on revenue," said Dmitry Osipov, the general director of Uralkali. The company notes that in 2017 the world saw a stable demand for potassium chloride. At the end of the year, it reached a record 65 million tons.

Last year, the Russian company signed contracts with China and India. These deals were concluded at a higher price, which contributed to the growth of world prices. It is expected that in the current year the global demand for potash fertilizers will remain at a high level. The company predicts that it can reach 67-68 million tons. This will have a positive impact on the business of Uralkali, which occupies about 20% of the world potash market.

The general director of Uralkali Trading Alexander Terletsky notes that, given the increase in potash prices, the company plans to sign a new contract with Chinese consumers at a price that will be more than 10% higher than the price of 2017. Traditionally, the largest potash producers contract in the spring with the largest consumer - China, then with India and Brazil. The prices of these contracts set the general level for the market.