Abu Qir Fertilizers has released its audited financial statements for the third quarter (Q3) of fiscal year (FY) 2020/21, posting a sales figure of EGP 2.269m, reflecting a 25% increase year-on-year (y-o-y), but a neutral quarter-on-quarter (q-o-q).
On a yearly basis, the rebound in sales was both volume and price driven, given that in Q3 of FY 2020/21 volumes sold were 559,000 tonnes versus 536,000 tonnes in the comparable period.
Average urea prices recorded $315/tonne during Q3 of FY 2020/21 versus a weak $222/tonne in Q3 of FY 2019/20. However, despite a strong urea price growth, the company’s top-line came in flat q-o-q.
This was on the back of lower volumes sold during the quarter, as Abu Qir Fertilizers recorded volumes sold of 559,000 tonnes versus 634,000 tonnes during Q2 of FY 2020/21. This took place, however, with much subdued price levels than the ones witnessed in Q3 of FY 2020/21.
Nevertheless, management remarked that the slump in volumes is not a concern, given that there remain volumes which were not booked in Q3 of FY 2020/21. These should have been booked in the preceding quarter at the same elevated prices witnessed last quarter, owing to shipping and logistic variables.
In spite of weaker volumes, the results Q3 of FY 2020/21 hammer home the importance of strong urea prices for urea producers. It spurs top-line growth, but also ensures heightened profitability levels as globally, producers in Europe, the US, and China are battling surging natural gas and coal prices.
These same producers are also hoping for the persistence of the strong demand brought about as the global economy begins to recover from the novel coronavirus (COVID-19) pandemic.
However, urea prices have been cooling down recently, reaching $320/tonne, which is still considered healthy, but well below the levels of $380-400/tonne seen during Q3 of FY 2020/21.
