It was a year of all records for the phosphate giant, which is posting an unprecedented operational and financial performance for 2022, supported by the rise in the prices of its products in all categories. Round-up of the detailed results that the OCP Group will unveil on March 28
World leader in phosphates and its derivatives, the OCP group has just published its detailed annual results confirming that the year 2022 was “successful with record results”. OCP has thus “recorded an exceptional operational and financial performance supported by the increase in prices of its products in all categories, as well as its constant efforts to optimize its production costs and operational efficiency”.
Highlighting its competitive advantages, namely its industrial flexibility, its commercial agility and its continuous actions to maintain its leadership in terms of costs, OCP is positioned at the top of its industry.
The group’s turnover reached 114.574 billion dirhams (MMDH) against 84.3 billion dirhams the previous year, an increase of 36%, mainly reflecting the increase in selling prices in the three segments which largely offset the decline in sales volumes.
Rock sales increased 51% year-on-year, mainly due to improved prices, amid lower export volumes to major importing regions.
Phosphoric acid revenue edged up 1% year-on-year as lower export volumes, primarily to Europe and India, more than offset the increase phosphoric acid prices. The drop in sales volumes to India is mainly explained by the change in the product mix in favor of fertilizers and the postponement of imports of phosphoric acid to the second quarter.
For fertilizers, sales increased by 44% compared to last year, thanks to higher sales prices, which offset the impact of lower export volumes. Less favorable economic conditions for farmers, linked to higher prices, have led to a drop in global demand.
The gross margin amounted to 70.381 billion dirhams against 55.218 billion dirhams a year earlier. The improvement in selling prices largely offset the increase in the cost of raw materials, in particular ammonia and sulphur.
EBITDA increased by 38% year-on-year, to stand at 50.076 billion dirhams against 36.269 billion dirhams in 2021. The improvement in selling prices, as well as the group’s operational efficiency translated into an EBITDA margin of 44%.
Finally, investment expenditure totaled 20.011 billion dirhams, above the 13.135 billion dirhams made in 2021.
The operating result amounted to 40.382 billion dirhams, a significant increase compared to the 25.799 billion dirhams achieved last year.
Net financial debt amounted to 50.945 billion dirhams with a financial leverage ratio of 1.02x as of December 13, 2022, which compares to 1.24x, posted at the end of December 2021.
World markets disrupted by war
Over the course of 2022, phosphate fertilizer prices have reached exceptionally high levels, fueled by a number of key factors: supply chain disruptions related to the Russian-Ukrainian conflict, combined with reduced Chinese exports and rising input costs.
In this context of war, the ammonia market experienced a difficult period which caused the cessation of Russian and Ukrainian exports from the Black Sea ports, which deprived the world trade of more than 15% of the ‘offer.
A ship from the OCP fleet.David Rodrigues / Le DeskThat said, the OCP group reacted as soon as Russian exports were interrupted in March by ensuring the supply of volumes from various sources (Egypt, Libya, Argentina, the Middle East, Indonesia, etc.). ), thus diversifying its ammonia suppliers.
Furthermore, it should be noted that the ammonia market is a regionalized market due to the high cost of logistics. As a result, the advantageous geographical location of Morocco has enabled the group to be well located in relation to the main world exporters of ammonia.
OCP has shown great resilience in maximizing the benefits of this bullish trend, while adjusting its production to adapt to demand. In addition, thanks to efficient management, the company managed to cope with the anticipated fall in prices in the second half of the year.
Starting in the third quarter, phosphate fertilizer prices recorded a gradual decline, reflecting a drop in demand following the deterioration in the financial health of farmers. Most key markets experienced demand destruction, including Brazil, Europe and the United States, which also suffered from adverse weather conditions. By contrast, India increased its imports due to low inventory levels and higher government subsidies.
“We achieved significant double-digit revenue growth in 2022, driven by a 44% increase in fertilizers, which accounted for a record 64% of total revenue, compared to 61% the previous year. », note the communication of the group. By geographically diversifying its customer base, OCP has focused its sales on high-demand markets such as South America, Asia and Africa.
The second industrial revolution launched
In parallel with its results, its CEO, Mostafa Terrab announced before King Mohammed VI the launch of the second phase of the investment program which provides for an investment of approximately 13 billion dollars (MM $) over the period 2023. -2027.
A new development cycle launched by Mostafa Terrab. Infographic: Mohamed Mhannaoui / Le DeskIt thus aims to support OCP’s competitiveness and operational efficiency, through capacity expansion projects and targeted sustainable development investments, around solar energy, water and green ammonia. .
OCP’s 2023-2027 investment program. Source: OCP, Infography: Mohamed Mhannaoui / Le DeskThis program aims to increase fertilizer production capacity while committing to achieve carbon neutrality before 2040 with the increase in production capacity from 12 million tonnes (MT) of fertilizer currently to 20 MT in 2027. The extension of mining capacities to go from 44 MT of rock currently to 77 MT in 2027.
OCP Nutricrops, the new fertilization giant
Following government approval, OCP set up its new subsidiary OCP Nutricrops, which brings together the Jorf Fertilizers Company (JFC I to V), with the aim of accelerating the execution of the group’s growth strategy in the field of customized fertilization for soils and plants, and thus strengthen its current position on a global scale.
At the same time, the phosphate giant and Koch Aq & Energy Solutions (KAES), a global provider of value-added solutions for the agriculture, energy and chemical markets, have completed the acquisition by KAES, in through a subsidiary, a 50% stake in the capital of Jorf Fertilizers Company III (JFC III) with OCP, thus creating a joint venture held equally by the two companies. The JV resulting from this acquisition will rely on the network of customers and the logistics capacities of the OCP Group and KAES with the aim of strengthening and enriching the offer of phosphate fertilizers in the world.
This transfer contract for an amount of 3 billion dirhams is accompanied by commercial contracts between the two parties where OCP SA will be the most exposed to the variable returns of the JFC III activity.
Jorf Fertilizers Company 3 (JFC 3). Mohamed Drissi Kamili/Le DeskThe group’s scope of consolidation has also undergone other changes. OCP launched a new green energy program which led to the creation of two new subsidiaries: OCP Green Water and OCP Green Energy. OCP Green Water will produce and market non-conventional water for industrial use and will also supply drinking water to El Jadida and Safi.
The objective is to supply approximately 85 million m° of drinking water in 2023 and 110 million m° in 2026. For its part, OCP Green Energy will produce energy for the cities of Benguerir and Khouribga, thus covering the needs of the Khouribga and Gantour mines, as well as supplying the Safi Chemical Complex with electrical energy.
COMATAM, Compagnie Marocaine de Transport et d’Affrètements Maritimes, has been integrated 100% into the scope of consolidation. This subsidiary specializes in ship consignment, shipping agency, as well as chartering operations for all varieties of maritime and river transport.
Mohammed VI Polytechnic University – UM6P has acquired a 22% stake in the capital of the consulting firm Valyans Consulting SA
Paradeep Phosphates Limited-PPL went public in May 2022 with a capital increase. Not having subscribed to this increase, the OCP Group saw its stake reduced to 28.05%.
This dilution had a financial impact on OCP, which suffered a reduction in its stake as well as a decrease in its investment in PPL. The result of this dilution amounts to 45 million dirhams (MDH).
Finally, as recently revealed by Le Desk, UM6P France SAS was set up in Paris. This new entity which replaces OCP International represents the French branch of the Mohammed VI Polytechnic University, which focuses on applied research and innovation. The objective of UM6P France is to become a major actor in the training of talents in France, by emphasizing the fields in which it has strong expertise such as agriculture, agroecology and the economic development of Africa.
The credo of food security
In its commitment to preserving global food security and its farmer-focused mission, OCP has launched several major initiatives to help African farmers during this period of significant price increases.
Mostafa Terrab, CEO of OCP Group and Samia Suluhu Hassan, President of Tanzania at the Dakar 2 Summit, January 26, 2023. Credit: United Republic of TanzaniaOn the one hand, by the group’s contribution through rebates on 550,000 tons of fertilizer in 2022, in order to mitigate the impact of soaring raw material prices and droughts, targeting more than 4 million farmers on the continent. On the other hand, as announced more recently, OCP is committed to dedicating more than 4 MT of fertilizer to African farmers in 2023.
This fertilizer supply program will include a component dedicated to training and capacity building in partnership with local actors, in line with the group’s approach centered on the farmer. This allocation will help ensure that the right fertilizers are available across the continent, to boost yields for 44 million farmers in 35 countries.