Despite the closure of certain production units due to COVID-19, OCP maintained positive results in 2020 thanks to an increase in exports mainly to Europe and Latin America.
Rabat – Morocco’s OCP Group recorded a turnover of MAD 56,128 billion ($6.20 billion) in 2020, up by 4% on a year-to-year comparison.The performance is due to an increase in the export of fertilizers and phosphate rock unlike in 2019, explained OCP in a press release on Thursday.
Phosphate rock turnover fell by 2% in 2020, due to a drop in prices combined with a less favorable product mix, according to the press release. The losses were offset both by the increase in exports, mainly to Europe and Latin America, and by closures of certain production units around the world due to the COVID-19 crisis.
For the OCP CEO and Chairman Mostafa Terrab, OCP’s continued positive performance amid a global crisis “illustrates the flexibility and agility of the Group.”
“The increase in fertilizer exports, coupled with lower raw material prices as well as our cost reduction strategy, have contributed to the substantial increase in operating leverage in 2020,” the report quoted him as saying.
To address the impact of COVID-19, OCP implemented a strict cost management strategy which the 2020 results reflect. OCP intends to maintain the measures in post-pandemic operations.
The Group’s annual results “have shown significant year-on-year growth, with strong growth in key financial indicators,” said Terrab, noting that “thanks to its operational excellence, OCP has succeeded in maximizing the creation of value while relying on its industrial flexibility as well as its commercial strike force which meets the growing demand of the main importing markets.”
Turnover by segment
Sales of phosphoric acid fell by 14% in 2020, due to a drop in prices and a decrease in exports. Sales volumes fell mainly in Asia, particularly in India, due to COVID-19 measures that disrupted local fertilizer production, according to OCP.
The turnover of phosphate fertilizers grew by 12% despite lower prices. The increase is mainly due to a demand-driven growth in exports, particularly in India and Brazil.
“Indeed, India has significantly increased its consumption of fertilizers against the backdrop of a good monsoon and a drop in local production, and in Brazil, the purchasing power of farmers, supported by the increase in crop prices, has encouraged larger imports,” OCP explained.
The press release specifies that there was a general drop in sulfur and ammonia prices in 2020. OCP explained the drop in sulfur prices by high inventory levels in China and greater production capacity, particularly in Russia, Saudi Arabia, and Kuwait.
The 2020 gross margin came to MAD 36.426 billion ($4.02 billion), recording an increase of 1.06%.
The phosphate producer said that this comes due “the fall in the prices of inputs, mainly sulfur, having largely neutralized the fall in prices on the three segments of the rock, acid, and fertilizers.”
EBITDA recorded a significant increase of 22% to reach MAD 18.657 billion ($2.05 billion).
The EBITDA margin stands at 33% due to an increase in sales, as well as the Group’s operational efficiency.
The operating result decreased from MAD 6.362 billion ($702.16 million) in 2019 to MAD 6.262 billion ($691.13 million) in 2020. The loss is due to the MAD 3 billion ($331.10 million) contribution OCP made to Morocco’s Special Fund for the Management and Response to COVID-19.
OCP’s end-of-year net financial debt stood at MAD 52.324 billion ($5.77 billion), with an adjusted leverage ratio of 2.82.