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PHOSAGRO : PhosAgro CEO Presents Achievements of Past 4 Years

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by August 23, 2017 General

    For Immediate Release                      23 August 2017

    PhosAgro CEO Presents Achievements of Past 4 Years

    Moscow -The Board of Directors of PhosAgro (Moscow Exchange, LSE: PHOR), one of
    the world's leading vertically integrated phosphate-based fertilizer producers,
    today heard a report by Andrey Guryev about the results of his four years as
    Chief Executive Officer of the Company, and received information about the
    development of the Company's strategy to 2025, as well as about implementation
    of the strategy to 2020.

    In his report addressed to the Board of Directors on the results of PhosAgro's
    performance over the past four years during which he was CEO, Andrey Guryev
    noted: "The team and I have achieved good results thanks to a comprehensive
    approach to improving the efficiency of our operations, investment in the
    modernisation of existing facilities, and the construction of new high-tech
    production lines. We have strengthened our reputation and confirmed our status
    as a reliable and profitable company for our shareholders, employees, customers
    and other stakeholders.

    "We intend to continue to strengthen Company's position on domestic and
    international markets. We have gig plans for PhosAgro's development. Our role
    in the global food chain will grow, as we produce a high-quality product that
    is unique in its purity."

    The key investment project under the Company's strategy to 2020 is the
    construction of a high-tech ammonia production facility with a capacity of 760
    ths tonnes/year that will be commissioned this year. This new production line
    is an integral part of the Russian Federation's Strategy for the Development of
    the Chemical and Petrochemical Industry through 2030. PhosAgro-Cherepovets will
    also commission a new 500 ths tonne/year urea shop. Completion of these two
    large-scale projects may enable PhosAgro to increase its production capacity
    from 2016 levels by nearly 24%, to 9.2 mln tonnes, by 2020.

    Other facilities that were constructed and commissioned in the last four years
    include:

    ·       Aluminium fluoride facility, the production capacity of which increased
    from 23 ths tonnes/year to 43 ths tonnes/year at PhosAgro's Cherepovets
    production site;

    ·       Complex PKS fertilizers line with a capacity of up to 100 ths tonnes/
    year at the Company's Volkhov production site;

    ·       Liquid ammonia storage facility with a capacity of 8 ths tonnes at the
    Balakovo production site;

    ·       The second Yuksporsky tunnel, main shaft No. 2 and expansion of the
    ANOF-3 beneficiation plant from 6.5 mln tonnes to 7.7 mln tonnes at Apatit,
    with the mid-term possibility of increasing capacity to 9 mln tonnes;

    ·       The brand new Smart Bulk Terminal at the Ust-Luga port, which has
    helped PhosAgro achieve sustainable cost savings on export sales compared to
    third-party terminals.

    Investments into efficiency and modernisation of production lines have enabled
    the Company to increase fertilizer output by about 5-10% per year. The Company
    expects fertilizer production to have increased by 40% by the end of 2017, from
    5.9 million tonnes in 2013 to 8.3 mln tonnes this year. Phosphate rock
    production is expected to have increased by 22%, from 7.7 mln tonnes in 2014 to
    9.4 mln tonnes for 2017.

    The number of fertilizer grades that PhosAgro produces has increased from 19 to
    35 and, and by 2020, this number is expected to grow to 40-50. The greatest
    demand is expected to be for NPK / NPS fertilizers, which will account for up
    to 37% of total consumption, while demand for DAP and MAP will account for
    around 36%.

    The company remains the leading fertilizer supplier for its priority domestic
    market. In the past four years, PhosAgro has nearly doubled domestic fertilizer
    and feed phosphates sales, reaching 2.1 million tonnes in 2016. The Company's
    sales network is active in 60 regions of Russia.

    Supported in a large part by state policy and support of Russian farmers by the
    Russian Fertilizer Producers Association, which Andrey Guryev has headed since
    2016, domestic agricultural producers were able to significantly increase
    fertilizer purchases and make Russia the world's top wheat exporter last year.

    Trading companies established by PhosAgro in Brazil, Switzerland, Germany,
    Poland, France and Singapore have given the Company a presence in all of its
    priority export markets, enabling it to respond quickly to changes in demand
    and customer needs. PhosAgro now sells 80% of its fertilizers directly to
    customers, without intermediaries.

    PhosAgro has kept the promises it made to investors during the IPO and SPO, and
    has paid dividends representing from 39% to 50% of net income. Thanks to the
    company's robust cash flows and ability to maintain a solid balance sheet
    throughout a major investment cycle, the Company has provided investors with
    dividend income of USD 3.1 per share since 2013. Total dividends paid out
    during the period amounted to around USD 1.2 billion, and the average daily
    trading volume of PhosAgro GDRs on the London Stock Exchange has increased from
    USD 2 million in 2013 to USD 7 million in 2017.

    Despite the fact that the average price for DAP (FOB Tampa) has decreased since
    2013 from USD 446 per tonne to USD 346 per tonne in 2016, the Company has
    successfully overcome these difficulties, and its EBITDA margin for the same
    period has grown from 23% in 2013 to 39% for 2016. The Company's EBITDA has
    increased from RUB 23.9 billion in 2013 to RUB 72.4 billion last year. 
    Moreover, the production capacity increases achieved to date bring an
    additional USD 180 million in EBITDA every year.

    The Company's energy efficiency programme deserves special attention. PhosAgro
    has reduced its per-unit energy costs by 40% over the last four years. After
    commissioning its own generating capacities, combined with newly-built mineral
    fertilizer production units, a number of PhosAgro's enterprises can almost
    fully meet their own electricity needs.

    Along with effective economic activity in regions where it is present, PhosAgro
    has a corporate housing programme, and participates in a number of major social
    programmes in the fields of education, health, youth policy and support of
    sports. Annual outgoings on charitable and social projects total more than RUB
    2.5 billion. PhosAgro is one of the biggest taxpayers in the regions where it
    is active, with consolidated tax payments increasing by 1.5 times in the last
    year alone to RUB 18 billion. The company is the leading taxpayer in the
    Murmansk and Vologda regions.

    In all cities where the company is active, it supports educational programmes
    as part of Educated and Healthy Children of Russia programme ("DROZD"). DROZD
    aims to address issues identified by the presidential programme for the
    development of physical education and sports to raise a healthy younger
    generation, developing children's sports, and healthy lifestyles for a
    harmonious upbringing.

    The company is engaged in the training of highly-qualified engineering
    personnel, with an educational process that follows the 'school-technical
    college-university' progression. Practically all graduates from PhosAgro
    classes continue their education in the country's best technological
    universities and colleges, and then go on to work at PhosAgro or at other
    high-tech enterprises in Russia.

    With the aim of developing tourism and creating a basis for forming new areas
    of economic growth, PhosAgro has partnered with the government of the Murmansk
    region and the mayor's office in Kirovsk to build the Bolshoi Vudyavr ski
    resort, which has become the flagship project of the region's tourism cluster. 
    Between 2013 and 2016, investment in major projects in the tourism, skiing and
    recreation spheres amounted to RUB 3.2 billion. As a result, aggregate tourism
    traffic has increased by more than 300% over a five-year period.

    With the direct involvement of Andrey Guryev, the PhosAgro has been in
    partnership with UNESCO since 2013, supporting talented young scientists who
    are engaged in research in the field of green chemistry, protecting the
    environment and human health. This programme is unique because it is the first
    time in the long history of UNESCO and the entire UN that such an initiative is
    being implemented on an extra-budgetary basis with financing from a Russian
    business.

    For many years, the company has acted as a strategic sponsor for chess and, in
    particular, the Russian Chess Federation, at which Andrey Guryev is a member of
    the Board of Trustees. PhosAgro was the official sponsor of the World Chess
    Championship held in Sochi in 2014 and in New York in 2016, where Sergey
    Karyakin from Russia faced the reigning champion, Magnus Carlsen from Norway.

    Over the last four years, PhosAgro's GDRs have been included in MSCI Russia and
    other indexes, and the Company became the only Russian winner of grand prix at
    the Russian Business Leaders: Dynamics and Responsibility competition.

    The members of the PhosAgro Board of Directors gave positive marks to Andrey
    Guryev's performance as the CEO of PhosAgro during the past four years noting
    that his appointment opened a new chapter in the Company's history, and that
    implementation of the strategy to 2020 under his management has enabled
    PhosAgro to significantly increase its competitive advantages and strengthen
    its position on the global fertilizer market. The Directors expressed their
    confidence that the legacy of the strategy to 2020 will be continued in the
    strategy to 2025, which will bring about further development PhosAgro's
    production assets and even greater efficiency improvements.

    For further information please contact:

    PJSC PhosAgro
    Alexander Seleznev, Head of Investor Relations
    ir@phosagro.ru
    +7 495 232 96 89 ex 21 87

    Timur Belov, Press Officer
    Anastacia Basos, Deputy Press Secretary
    +7 495 232 9689

    EM
    Sam VanDerlip
    vanderlip@em-comms.com
    +44 7554 993 032
    +7 499 918 3134

    Notes to Editors

    PhosAgro is one of the leading global vertically integrated phosphate-based
    fertilizer producers. The Company focuses on the production of phosphate-based
    fertilizers, feed phosphate and high-grade phosphate rock (P2O5 content of not
    less than 39%), as well as ammonia and nitrogen-based fertilizers.

    The Company is the largest phosphate-based fertilizer producer in Europe, the
    largest producer of high-grade phosphate rock worldwide and the third largest
    MAP/DAP producer in the world (excluding China), according to Fertecon.
    PhosAgro is also one of the leading producers of feed phosphates (MCP) in
    Europe, and the only producer in Russia.

    PhosAgro has 2.1 billion tonnes of resources (according to JORC) of high
    quality apatite-nepheline ore. The Company's mines and phosphate rock
    production facilities are located in the mountainous areas of the Kola
    Peninsula in the Murmansk region of northwest Russia, whereas its fertilizer
    and feed phosphate production assets are located near the city of Cherepovets
    in the Vologda region and near the city of Balakovo in the Saratov region of
    southwest part of European Russia.

    PhosAgro's 2016 IFRS revenue was over USD 2.8 bln and EBITDA was USD 1.08 bln.

    For further information on PhosAgro please visit: www.PhosAgro.com

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