OCI N.V. publishes its FY 2016 results

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Algemeen advies 25/03/2017 07:02
OCI N.V. Reports 2016 Adjusted EBITDA of $ 467 Million and Net
Income of $ 168 Million
Operational Highlights:
? Own-produced volumes sold increased 26.6% in 2016 to 6.1 million metric tons
? Selling prices reached trough levels in 2016, robust price increases in the fourth quarter and into 2017
? Iowa Fertilizer Company in final stage of start-up, initial production expected imminently
? Natgasoline 78.1% complete as at end-February 2017, expect commissioning in Q4 2017
? Egypt urea utilization rate 75% during 2016 and in excess of 100% in January and February 2017
Summary of Consolidated Results for FY 2016:
? Revenue decreased 12.8% to $ 1,907 million, mainly due to lower 2016 average selling prices
? EBITDA of $ 622 million, adjusted EBITDA of $ 467 million
? Net income of $ 168 million
? Net debt stood at $ 4.2 billion as of 31 December 2016
? All short-term debt repaid or refinanced, no debt maturing until September 2018
Statement from the Chief Executive Officer – Nassef Sawiris:
“2016 was a tough year for the nitrogen fertilizer sector as prices dropped to multi-year lows. We have however used it as an opportunity to improve production efficiencies at our plants, refocus our commercial operations and launch a $ 100 million cost reduction plan while continuing to complete our growth projects. We also strengthened our balance sheet by repaying or refinancing all short-term debt. We have entered 2017 with renewed confidence.
In 2017, we expect a significant ramp-up in production volumes from the 6.1 million tons already realized in 2016.
Our nitrogen fertilizer greenfield facility in Iowa is now in the final stage of start-up phase with the first product expected imminently. Natgasoline in the US is making good progress and we expect commissioning in the fourth quarter this year. The start-up of these two projects will increase our total annual nitrogen fertilizer and Industrial chemical sellable production capacity by 50% to exceed 12.5 million tons. We are now also studying the restart of our mothballed methanol facility at BioMCN in The Netherlands, which would add another 430 ktpa of product.
Our underlying markets, both nitrogen fertilizers and methanol, have turned significantly more positive in the last few months, with robust price increases especially during the fourth quarter of 2016 and into 2017. We believe industry fundamentals are improving, with healthy demand growth coupled with limited new supply expected over the next few years to lend support to prices across our product portfolio in the foreseeable future. Supply additions peaked in 2016, and capacity growth is expected to be below trend demand growth going forward.
Moreover, we expect Chinese exports to continue to decline in 2017, as a consequence of high break-even costs for producers, increased focus to operate profitably and the Chinese government’s desire to reduce air pollution.
As one of the lowest-cost producers globally with assets that are capable of superior cash conversion, we believe
OCI is best-placed to benefit from improvements in underlying markets.”

Outlook
With the start-up of Iowa Fertilizer Company and Natgasoline, expected higher capacity utilization rates in Egypt and the benefit of a lower exchange rate there, OCI expects a significant step-up in operational cash flow in 2017 and again in 2018, further boosted by an improved price environment. OCI is studying the potential to restart the second methanol production line at BioMCN, which is currently mothballed. The likely capital expenditure for this will be spread over the period 2018 - 2020. Other than that, OCI has no further financing requirements for growth capex and expects capital expenditure to drop from on average in excess of $ 1.0 billion over the past few years
to a maintenance level of $ 150 - 200 million on an annual basis. Accordingly, OCI expects a path of rapid deleveraging, towards achieving an investment grade rating by 2018.

lees meer op
http://www.oci.nl/media/cms_page_media/263/OCI%20N.V.%20FY%202016%20Results%20Report%20FINAL.pdf



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