Currency debts of "Uralkali" chained the company to the financial bottom

Despite the growth in revenue in the first half of 2018, the producer of potash fertilizers showed an "accounting loss" in rubles. It was the result of huge currency debts of the company Dmitry Mazepin, which reached 5.4 billion dollars and because of the fall in the ruble rate ruined the financial statistics.
30.08.2018
Kommersant
Origin source
"Uralkali" in the first half of the year showed a net loss of 242 million rubles. against profit a year earlier. The company explains such financial results by exchange rate differences and revaluation of derivative financial instruments. Analysts call the company's losses "accounting" and say that in general the exporter wins because of the weakening of the ruble, but could have shown better results, if not for the foreign exchange debt.

The net loss of PJSC Uralkali in January-June 2018 amounted to 242 million rubles. against profit of 26.1 billion rubles. last year, according to the company's IFRS report. The company's revenue for the first half of the year increased by 4.2%, to 83.8 billion rubles., Gross profit by 5.8%, to 62.3 billion rubles., Operating profit - by 14.4%, to 36.5 billion rubles.

In Uralkali, Kommersant explained that the financial result was affected by a loss on exchange differences and a revaluation of derivative financial instruments: "Positive exchange rate differences increase net profit, negative, respectively, reduce net profit and lead to a net loss for the period." Losses are caused by the significant foreign exchange debt of Uralkali, which, with the weakening of the ruble, respectively, increases in ruble terms.

According to the report, the loss on exchange rate differences amounted to 23.5 billion rubles. (in 2017 - profit of 9.1 billion rubles.), a loss from the change in the fair value of derivative financial instruments - 1.7 billion rubles. (in 2017 - a profit of 429 million rubles.) The company declined to comment on the "Kommersant" profit forecast for the year.

Uralkali is one of the world's leading producers and exporters of potassium. Production assets of the company include five mines and seven concentrating plants located in the cities of Berezniki and Solikamsk (Perm Territory). The controlling stake of Uralkali (54.77%) is quasi-cash, Uralkali-Technology, 20% - from Uralkhim Dmitry Mazepin and his partner Dmitry Lobyak. In 2017, the board of directors of Uralkali approved the sale of about 10% of quasi-treasury shares of Uralkhim to reduce the debt burden. The market value of this share was about 38 billion rubles. FAS approved the deal on December 18, in August 2018, the European Commission also allowed Uralkhim to acquire about 10% of Uralkali shares.

Andrei Lobazov from Aton notes that, in general, Uralkali as an exporter is benefiting from the weakening of the ruble. According to him, the company's losses for the first half of the year are mainly "accounting". At the same time, he draws attention to the fact that Uralkali could show a higher net profit, but the company has a large debt in foreign currency. In 2017, the net debt of Uralkali itself decreased by 2.7%, to $ 5.4 billion, the ratio of net debt to EBITDA was 4.01.

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