The OCP group announces its results for the end of December 2023 on March 28, reporting a falling turnover of 91.2 billion dirhams. For Mostafa Terrab, the group displays a solid performance, despite market conditions marked by a significant drop in the prices of phosphate products compared to the exceptional levels of 2022
This March 28, the OCP group publishes its results at the end of December 2023. The result is a turnover which stands at 91.2 billion dirhams (billion dirhams), down compared to the previous year (114. 5 billion dirhams), while recording a significant rebound observed in the second half. The gross margin reached MAD 50.53 billion, down compared to 2022. The same goes for EBITDA which stood at MAD 29.39 billion, generating an EBITDA margin of 32%. Regarding investment expenditure, and due to…
The OCP group’s communication indicates that the sharp drop in prices observed in the first half of 2023, following the exceptional levels recorded in 2022, gradually attenuated during the third and fourth quarter. It is added that this improvement can be attributed to several factors, notably the reduction of Chinese exports combined with a gradual increase in demand in agricultural areas such as the United States, Europe and Brazil. It is added that these regions have been impacted by low stock levels and favorable economic conditions for farmers. In addition, from July onwards, the cost of raw materials, particularly that of ammonia, increased sharply due to unforeseen outages impacting certain producers and a significant increase in gas prices in Europe, thus exerting pressure on the increase in fertilizer prices.
OCP specifies that despite a notable drop in fertilizer export prices, turnover in this segment only recorded a decrease of 18% compared to 2022 levels in local currency. This reduction was somewhat mitigated by increased export volumes, supported by growing global demand in certain regions, notably South America and Europe.
As for the turnover of rock and phosphoric acid, they recorded respective decreases of 18% and 40% compared to the previous year in local currency, under the effect of the normalization of price in 2023.
This trend was partially offset by an increase in export volumes in the second half of the year, for example in India, to meet the growing demand seen in the third and fourth quarters. Finally, net financial debt amounted to MAD 68.2 billion with a financial leverage ratio of 2.32x as of December 31, 2023, which compares to 1.02x, displayed at the end of December 2023.
As highlights for the year 2023, the OCP group notes three elements: water management, where the group has advanced in the construction of a water pipeline between Jorf Lasfar and Khouribga, in addition to having successfully commissioned two new desalination plants. It is reported that the Jorf Lasfar chemical site is now self-sufficient in unconventional water, which has made it possible to start supplying drinking water to the neighboring towns of Safi and El Jadida, respectively in August and November 2023.
The second point is the expansion of fertilizer production. The Jorf Lasfar chemical site started operations on the first two TSP fertilizer production lines in May and December 2023, and the third line is expected to be operational by the end of the first quarter of 2024. The third point relates to funding. OCP indicates that following the inaugural issues of perpetual subordinated bonds in 2016 and 2018, the group launched its third similar issue in November 2023 for an amount of 5 billion dirhams. The issuance of perpetual bonds is treated as an integral component of equity in accordance with international accounting standards. This strategic approach aims to strengthen the group’s financial structure, supporting its transformation efforts while consolidating its indicators.
The group also claims that during the fourth quarter of 2023, the International Finance Corporation (IFC), a member entity of the World Bank group, granted a loan of 100 million euros to OCP. The financing is intended for the development of four solar power plants, which will be used to power the group’s industrial operations. Therefore, this initiative is expected to significantly reduce the group’s carbon footprint while strengthening its capacity to produce green fertilizers.
Strengthen the industrial flexibility of the OCP group
For Mostafa Terrab, president and CEO of the OCP group, “the results of the fourth quarter contributed to a solid performance for the whole year, despite market conditions marked by a significant drop in the prices of phosphate products compared to the exceptional levels of 2022. This transition towards levels of more normal prices boosted demand in the main importing regions in the second half of 2023, resulting in a 43% increase in turnover compared to the first half of 2023, and a nearly three-fold increase in EBITDA”.
Mostafa Terrab adds that “fertilizers represented 66% of OCP’s total revenue in 2023, marking a substantial increase in TSP volumes compared to the previous year. The latter contributed 15% of fertilizer sales, compared to 11% in 2022, making it a significant part of our additional supply in 2023. This product has generated growing demand, particularly in Brazil and other countries. other regions of South America and Africa, thanks to its effectiveness in optimizing the application of fertilizers on various types of soil.
For 2023, Mostafa Terrab recalls that “the OCP group continued the deployment of the second phase of its investment program. The objective of this program is to strengthen the group’s competitive advantage by focusing on continuous product innovation, capacity expansion and improvement of its operational efficiency. This includes strengthening OCP’s industrial flexibility, investments in solar energy, water management and green ammonia production.
Finally, the CEO concludes that “OCP’s ability to meet demand by delivering significant volumes in real time has enabled us to effectively overcome the challenges encountered in 2023 and adapt our offering to the recovery in global demand. Our solid performance is the result of the strategic advantages that have guided the group’s trajectory for more than 15 years, notably our operational flexibility, our commercial agility and our leading position in terms of cost control.
