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OCP Group’s revenue remains relatively stable

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The turnover of the ‘Office Cherifien des Phosphates’ (OCP) Group was stabilized around 2.8 billion dollars in the first half of 2020, compared to the same period of 2019.

This is despite a drop in prices of all categories of phosphate products, the Group said in a statement on Tuesday, 29 September 2020. The revenue stability is attributable to higher fertilizer sales volumes, which increased by more than 1.5 million tonnes from levels in the first half of 2019.

For this period, phosphates revenues decreased by five percent year on year, mainly reflecting lower rock prices, which more than offset the increase in export volumes in the first half, especially to Latin America and Europe, the same source said.

In a context of over-supply on the international market, the average prices of diammonium phosphate (DAP) have fallen by more than 20 percent over the first semester of 2020, compared to those practiced during the same period in 2019.

This unfavourable price situation was offset by an increase in world imports, with the exception of India and the United States, which held high stocks at the start of the year, accompanied by a decline in Chinese exports.

The OCP Group has benefited from its presence across five continents and its industrial flexibility to adapt its product portfolio to the demand of each region, and to take full advantage of market opportunities.

This increase in the Group’s fertilizer sales volume is supported, in particular, by the business continuity plan. The plan was implemented from the start of the pandemic, which made it possible to maintain mining and chemical production operations on all sites, at a usual rate, it is emphasized.

The Group’s EBITDA remained stable, with a solid margin of 31 percent, similar to 2019, which is well above the sector average of approximately 20 percent over the same period, thus benefiting from lower costs in particular production and sulfur and ammonia costs.

In detail, EBITDA, for the first half of 2020, reached 869 million dollars, compared to the 883 million dollars realized in the same period of 2019. Phosphoric acid sales decreased by 31 percent, compared to the same period last year, which was impacted by both lower prices and lower volumes.

The decline in sales volumes is mainly the result of acid exports to India, where lower demand reflected reduced local fertilizer production, following the spread of the pandemic. The fall in acid prices in the first half of 2020, compared to the first half of 2019, followed the same downward trend as the prices of rocks and fertilizers.

The OCP, thus, consolidates its leading position in the sector, in particular, thanks to the continuous improvement of its production costs. OCP has also opened several performance management projects, in order to limit the negative effects generated by the pandemic. The effect of these measures, which will continue post-pandemic, will be visible on the results for 2020, the statement said.

As for the Group’s consolidated net income, it was impacted by the full recognition over the half-year of OCP’s contribution to the COVID-19 Special Fund of 3 billion dirham.

Despite the continuing pandemic and the uncertainty weighing in on the economic environment, the Group’s outlook for 2020 looks favourable, the statement concluded.

-APA

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