OCI Global reports sharp drop in revenues and earnings, sells off fertilizer assets

AMSTERDAM: OCI Global, a leading producer and distributor of nitrogen fertilizers and industrial chemicals, announced its financial results for the fourth quarter and full year 2023, showing a significant decline in revenues and earnings due to lower global nitrogen prices.

OCI Global

The company also revealed that it has sold its stakes in Fertiglobe and Iowa Fertilizer Company, two of its major fertilizer subsidiaries, for a combined total of $7.22 billion, and plans to use the proceeds to reduce debt and reward shareholders.

Key Highlights

  • OCI Global’s total revenues for FY 2023 were $5,022 million, down 48% year-on-year (YoY), and its adjusted EBITDA was $1,214 million, down 69% YoY.
  • The company’s Q4 2023 revenues were $1,209 million, down 45% YoY, and its adjusted EBITDA was $310 million, down 54% YoY. The declines were mainly driven by lower nitrogen prices, partially offset by lower natural gas costs.
  • The company’s adjusted net loss from total operations in Q4 2023 was $46 million, compared to an adjusted net profit of $205 million in Q4 2022.
  • The company’s total operating free cash flow was $16 million in Q4 2023.
  • The company’s net debt from total operations was $3,740 million at the end of 2023, with a total net leverage of 3.1x on a consolidated basis.
  • In December 2023, the company entered into a binding agreement to sell 100% of its equity interests in Iowa Fertilizer Company, a state-of-the-art fertilizer plant in the US, to Koch Ag & Energy Solutions for $3.60 billion on a cash free debt free basis.
  • In the same month, the company also sold its 50% stake in Fertiglobe, a leading nitrogen fertilizer producer in the Middle East and North Africa, to Abu Dhabi National Oil Company for $3.62 billion, exiting and monetizing its entire equity stake.
  • The company and ADNOC have agreed to explore global strategic collaboration on future joint investments in decarbonization and product distribution across North America and Europe.
  • The company plans to use the proceeds from the two transactions to significantly reduce its holding company debt to a net cash position by the end of 2024, and to distribute at least $3 billion of capital to shareholders, while continuing to execute its growth initiatives.
  • The company has suspended its semi-annual cash distribution in light of the recent strategic activity and the expected extraordinary distributions of capital to shareholders in 2024.
  • The company is currently exploring further value creative strategic actions, following the divestments and the inbound interest in the continuing business.
  • The company’s discontinued operations in the segment analysis include Fertiglobe, Iowa Fertilizer Company, and a portion of N-7 operations.

Ahmed El-Hoshy, CEO of OCI Global commented: “We are proud of OCI’s achievements in 2023, a challenging yet transformational year for the company. Encouragingly, OCI benefited in the fourth quarter from positive momentum in nitrogen prices globally, which helped offset lower volumes at IFCo, attributable to the extended turnaround. In contrast, methanol has seen a more challenging year, with down-cycle pricing and uncertainty around key macroeconomic drivers.

The successive announcements of the sale of our equity holding in Fertiglobe to ADNOC, and our industry leading Iowa fertilizer asset to KAES in December 2023 marked a pivotal juncture in OCI’s history. The transactions are expected to deliver $7.2 billion of gross cash proceeds subject to customary closing conditions and receipt of relevant antitrust approvals, and both are expected to close this year. This significant value unlock has helped narrow the discount to OCI’s intrinsic value and further reinforces OCI’s extended track record of value creation.

Looking ahead, we remain focused on running our operations effectively whilst working towards the successful closing of both transactions.

On a continuing basis, our strategically differentiated and well capitalized platform is optimally positioned to accelerate efforts in the energy transition space, consolidating early mover advantages and leveraging superior execution capabilities in lower carbon products. We are targeting to materially increase our earnings from our low carbon ammonia and methanol portfolio in the coming years.

This portfolio includes OCI’s low carbon ammonia and methanol complex in Texas, our uniquely positioned European fertilizer and integrated nitrates business in the centre of Europe’s agricultural heartland, our growing AdBlue/DEF capacity in Europe, and our unique import and distribution capacity at the Port of Rotterdam.

We remain the leading green methanol producer globally and our low carbon initiatives cumulatively place us well ahead of our peers, enabling us to capitalize upon the increasing demand for ammonia and methanol from emerging applications such as shipping fuel and power generation, as well as further decarbonizing existing agricultural and industrial end markets.

In closing, we look forward to an exciting year ahead and I wish to personally thank the entire OCI team for their tireless focus on operational and process safety, which remains our top priority, and my colleagues’ ongoing commitment to manufacturing excellence.”

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