Credit Suisse 28th Annual Basic Materials Conference September, 2015

Transcription

1 Credit Suisse 28th Annual Basic Materials Conference September, 215 1

2 Disclaimer These materials have been prepared by OJSC PhosAgro (PhosAgro) solely for your information and may not be copied, reproduced, retransmitted or further distributed, directly or indirectly, by any recipient to any other person or published, in whole or in part, for any purpose or under any circumstances. These materials have not been independently verified. All information presented or contained in this presentation is subject to verification, correction, completion and change without notice. None of PhosAgro nor any other person undertakes any obligation to amend, correct or update this presentation or to provide the recipient with access to any additional information that may arise in connection with it. These materials may contain projections and other forward-looking statements regarding future events or the future financial performance of PhosAgro. You can identify forward-looking statements by terms such as expect, believe, estimate, intend, will, could, may or might, or other similar expressions. PhosAgro cautions you that these statements are only statements regarding PhosAgro's intentions, beliefs or current expectations concerning, among other things, its results of operations, financial condition, liquidity, prospects, growth, strategies and the fertilizer and mining industry and are based on numerous assumptions and accordingly actual events or results may differ materially. PhosAgro will not update these statements to reflect events and circumstances occurring after the date hereof. Factors that could cause the actual results to differ materially from those contained in projections or forwardlooking statements of PhosAgro may include, among others, general economic and competitive environment conditions in the markets in which PhosAgro operates, market change in the fertilizer and mining industries, as well as many other risks affecting PhosAgro and its operations. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance. These materials do not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any securities of PhosAgro in any jurisdiction, nor shall they or any part of them nor the fact of their presentation, communication or distribution form the basis of, or be relied on in connection with, any contract or investment decision. No representation or warranty, express or implied, is given by PhosAgro, its affiliates or any of their respective advisers, officers, employees or agents, as to the accuracy, completeness or fairness of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of these materials or their contents. The merit and suitability of any investment in PhosAgro should be independently evaluated and any person considering such an investment in PhosAgro is advised to obtain independent advice as to the legal, tax, accounting, financial, credit and other related advice prior to making an investment. By accepting a copy of these materials, you agree to be bound by the foregoing limitations. 2

3 PhosAgro and the global fertilizer industry 3

4 PhosAgro at a glance World class integrated phosphate producer Large high quality apatite-nepheline resources Self-sufficiency in key feedstocks provides for low costs Flexible production and sales Strong financial performance #1 global producer of high-grade phosphate rock #3 global DAP/MAP producer (1) Overall fertilizer capacity of 6.5 mln t 2.5 bln t of ore resources (2) (over 75 years of production) Al 2 O 3 resource of 283 mln t Substantial resources of rare earth oxides (41% of Russian resources (3) ) 1% self-sufficient in phosphate rock 72%-9% self-sufficient in ammonia (4) More than 4% self-sufficiency in electricity Flexible production lines Phosphate fertilizer capacities of 4.3 mln t, 1.85 mln t fully flexible into NPK production Leader in Russian fertilizer market growing twice faster than the world consumption Net back driven sales model with a global presence EBITDA of $979 mln in 214 1H215 EBITDA of $723 mln 1H215 Net debt/ebitda:.94x Leading global phosphate rock producers (by production) E 14 35% 33% 23% 31% DAP, $/t, FOB, TAMPA (FMB Fertecon) OCP Mosaic Vale PhosAgro PotashCorp JPMC Maaden Leading global DAP/MAP producers (by capacity) , mln t, excluding Chinese producers #1 producer of high-grade phosphate rock (>35.7% P 2 O 5 ) EBITDA margin, % (RHS) , mln t, excluding Chinese producers Mosaic* OCP Phosagro Ma'aden Eurochem PotashCorp Vale DAP price dynamics vs EBITDA margin, average DAP price change (%) -14% -18% +7% 1 Note: (1) Excluding Chinese producers (2) PhosAgro, IMC as of June 211 (3) Russian Academy of Science (4) self sufficiency depends on the composition of the products produced by PhosAgro Source: IFA, CRU, companies data, PhosAgro 4 Source: Argus-FMB, CRU, IFA, companies data, PhosAgro

5 214 MAP/DAP production vs consumption, global trade in million tonnes of P 2 O 5 World MAP/DAP demand: 28.4 mn t of P 2 O 5 World MAP/DAP trade: 11.1 mn t of P 2 O Latin America 4 Europe 7 South Asia North America Russia & CIS 5 Middle East 6 North Africa 8 East Asia Production Consumption Source: IFA, CRU 5

6 214 MAP/DAP regional balances of P2O5, mn t Consumption Production Export Import 1% 9% 8% 7% 1% 6% 7% 3% 2% 3% 6% 6% 7% 2% 14% 3% 16% 14% 13% 14% 5% 2% 1% 12% Others Africa Middle East 6% 16% 19% 1% Russia & CIS 5% 4% 16% 7% 3% 29% 21% Europe Latin America 3% 2% 1% % 11% 46% 36% 3% 23% 3% Consumption Production Export Import Consumption Production Export Import North America South Asia East Asia Source: CRU

7 Jan-99 Apr-99 Jul-99 Oct-99 Jan- Apr- Jul- Oct- Jan-1 Apr-1 Jul-1 Oct-1 Jan-2 Apr-2 Jul-2 Oct-2 Jan-3 Apr-3 Jul-3 Oct-3 Jan-4 Apr-4 Jul-4 Oct-4 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Jan-8 Apr-8 Jul-8 Oct-8 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 DAP and cereals basket price, $US/t DAP spread relative to basket price,% High grain prices driven by market imbalances motivate farmers to use more fertilizers Cereals basket to DAP price spread High correlation between cereals basket and DAP prices year correlation 1,4 1,2 1, 8 6 R 2 = New Big Capacities: - China India Australia Morocco /9 Financial Crisis - Low DAP import in India - Potash BPC break up DAP, $/t, FOB Tampa Grain basket price Spread relative to basket price, % (rhs) Median DAP to basket price, % Source: Fertecon, Argus-FMB, FAO, USDA, IFA Note: (1) agricultural commodity prices are represented by a grain index calculated as follows: (wheat price*7+ corn price *8 rice price*4.5+soybeans price*2.5)/22 7

8 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Local currencies rebased to 1* USD Fertilizer price developments 12 2Q 214 1Q 215 2Q 215 Avg change, Q2-o-Q Uralkali split with BPC DAP: -3% 1 INR/USD: - -2% BRL/USD: -6% 35 6 RUB/USD: +18% 3 5 Potash: % 4 Urea: -6% 25 INR/USD BRL/USD RUB/USD DAP, FOB Tampa Potash, FOB Vancouver Urea, FOB Yuzhny Source: Argus-FMB, Bloomberg, PhosAgro analysis Note:(*) rebased at 1 July 213 8

9 China: key figures (1) China is the world s largest MAP/DAP consumer and producer 4% 38% 36% 34% 32% 3% 28% 26% 24% 38% 38% 36% 38% 2, 33% 19,124 18,75 18,524 16,696 15, 15,199 1, 5, 22% 2% Chinese MAP/DAP capacities, kmt of P2O5 % of world MAP/DAP consumption China is a farming giant in absolute terms Country China India Brazil Russia USA Employment in agriculture, % of total Rural population, mn Rural population, % of total 47% 68% 15% 26% 19% Total population, mn 1,375 1, Farm Holdings, mn Value added in agriculture, % of GDP < 1 Arable land per capita, ha Water resources per capita, m 3 /cap P 2 O 5 consumption, mn t P 2 O 5 consumption, % of world total 36% 15% 9% 1% 9% 1, 5, Capacity closures outpace new capacity additions -5, F-219F Capacity additions, kmt of P2O5 Capacity closures (possible), kmt of P2O5 Source: World bank, IFA, FAO, CRU Note:(1) data provided for 212, unless otherwise stated 9 Comment China accounted for 6% of world phosphate rock resources and 36% of world P 2 O 5 consumption Chinese population grows with 15 mn babies born annually and net population growth of 6 mn people (equivalent to the population of Belgium). Belgium consumes 3,69 kcal/capita/day and GDP is $US 45 k per capita, compared to 2,99 kcal/capita/day and $US 6 k in China Chinese government focus on food security appears in solid P 2 O 5 capacity growth, though it will continue at a much slower rate

10 Chinese Big Phosphates Producers: Long distance to the main ports and agricultural area Company Rock, mln T PA, kt P2O5 DAP, kt P2O5 MAP, kt P2O5 Ammonia, kt YTH Wengfu Kailin Yihua N.D Corn Production Area Total 4Big Total China km Main P-Fertilizers production area with total capacities: Phos.Rock 47.6 mln t P.Acid 7.3 mln t P2O5 DAP/MAP 6.7 mln t P2O5 >2 km 1-12 km Wheat Production Area 8-12 km Rice Production Area Source: CRU, IFA 1

11 mn t China: a net P importer on the horizon Economic growth will affect dietary patterns significantly China will continue to increase food imports % 2 Sugar +6% Fresh dairy products 33 +3% 4 Vegetable oils % 21 Poultry meat +5% 7 CAGR 8 Beef and veal (cwe) CAGR: 13% Soybean import, mln t Rice import, mln t Maize import, mln t Wheat import, mln t 4 Growing P intakes of imported food 25..lead to potential P net imports China fertilizers exports*, kt of P2O5 China agro imports**, kt of P2O China P-balance, kt of P2O5 Note: (*) CRU data, (**) calculated as USDA/IGC data about ag imports multiplied on P 2 O 5 removal rate in kg P 2 O 5 per t of primary crops: wheat ; rice - 6.4; corn - 6.7; barley - 7; soybean - 17; palm oil - 2; rapeseed 9 11 Source: FAO, CRU

12 China: environmental issues coming to the forefront Chinese ag resources deteriorate with limited arable land... and water availability decreases Arable land, mn ha Fresh water availability per capita, 1 m³ Chinese farmers use high-intensity agricultural techniques Tainted rice was discovered in several Chinese provinces High intensity agriculture All pollutants from pesticides and fertilizers end up in soil For 3 years Water scarcity, contamination and pollution Fertilizer burn Soil pollution and cadmium contamination Polluted Arsenic rice (As) Cadmium rice (Cd) Lead rice (Pb) Source: FAO, Global Times 12

13 Feb-1 Apr-1 Jun-1 Aug-1 Oct-1 Dec-1 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Chinese exports go to India China exports a significant part of its p-based fertilizers to India DAP/MAP exports, mn t of P 2 O and India imports correspond with China s export window DAP imports, kt Export duty for DAP, % % 39% % 4% 5% 5% 5% 57% 8% 2.1 6% 44% 1% 25% 46% 15% India Brazil Others Half of exports from China and Ma aden go to India DAP/MAP exports in 214, mn t of P 2 O x.x Import volumes, mn t of P 2 O 5 x.x Export volumes, mn t of P 2 O 5 x.x Trade volumes, mn t of P 2 O 5 India DAP imports, kt (lhs) China export duty, % (rhs) Source: CRU, FAI, IFA 13

14 India: key figures (1) India is the second largest MAP/DAP consumer Rural population and ag production dominate in India and the world largest DAP importer 6 5% 48% 5 4% 4 3 5,32 5,74 4, % 25% 3,444 3,5 Country India China Brazil Russia USA 6% Employment in agriculture, % of total % Rural population, mn Rural population, % of total 4% 68% 47% 15% 26% 19% Total population, mn 1,241 1, % Farm Holdings, mn % Value added in agriculture, % of GDP < 1 1% Arable land per capita, ha India MAP/DAP consumption, mln t of P2O5 % Water resources per capita, m 3 /cap P 2 O 5 consumption, mn t % of world total DAP imports, P2O5 P 2 O 5 consumption, % of world total 15% 36% 9% 1% 9% Comment India accounted for % of world phosphate rock resources and 15% of world P 2 O 5 consumption 22 mn babies are born annually in India; this is the equivalent of the entire population of Australia. Australia consumes 3,22 kcal/capita/day and GDP is $US 67 k per capita compared to 2,36 kcal/capita/day and GDP of $US 1.5 k in India Second largest population in combination with scarcity in phosphate resource make India a major importer of phosphates Large number of farm holdings implies their relative small size: limited access to modern farming and agronomic technologies result in imbalanced fertilizer application Source: World bank, IFA, FAO, CRU, USDA Note:(1) data provided for 212, unless otherwise stated 14

15 Wheat Yield, kg/ha P 2 O 5 :N ratio, % Rice Yield, kg/ha P 2 O 5 :N ratio, % Rs bn Urea consumption, mn t DAP consumption, mn t India introduced a new subsidy system in /1 21/11 211/12 212/13 213/14 214/15 215/16 Subsidies for urea, Rs bn P 2 O 5 : N ratios, wheat yields 2 India s subsidy policy: favouring urea leads to unbalanced fertilization Subsidies for P&K fertilizers, Rs bn Normal P 2 O 5 :N ratio at expense of DAP consumption /1 21/11 211/12 212/13 213/14 214/15 215/16E Urea consumption in India, mln t (rhs) DAP consumption in India, mln t (lhs) which lead to increased urea consumption P 2 O 5 : N ratios, rice yields Normal P 2 O 5 :N ratio El Nino Normal P2O5/N ration = 5% Wheat Yield (LS) Current ratio P2O5/N (RS) El Nino Rice yield (LS) Current ratio P2O5/N (RS) Normal P2O5/N ration = 5% Source: IGC, CRU, FAI, USDA, PhosAgro 15

16 Price Disparity, Rs/mT India: Historical Prices & Consumption Disparity of Urea vs DAP Urea DAP DAP to Urea Farm gate Price Disparity has increased from 1.87 to 4.4, leading to reduction in DAP consumption Consumption Disparity and Rice yield dynamic, mln t mln T 35 Urea DAP rice yield Kg/Ha Source: FAI, WGR 16

17 India: Fertilizer Demand & Consumption Update Post NBS (21-11) DAP Demand DAP Consumption Urea Demand Urea Consumption NPK Demand NPK Consumption MOP Demand MOP Consumption Source: FAI, WGR 17

18 India: Fertilizer Demand & Import Medium Term Outlook Urea Demand Growth 2.7% annually; DAP, NPK, and MOP Demand estimated to 4% annually; DAP and Complex fertilizer consumption to remain low due to High Price Disparity with Urea DAP and Complex Fertilizer sale, however, likely to be higher than Demand, mln T 7 Urea DAP NPK MOP (direct sale) e e e e Import, mln T 35 Import Urea Import DAP Import NPK Import MOP (direct sale) e e e e Source: FAI, WGR 18

19 Brazil: key figures (1) Brazil is the largest ag exporter among developing countries Brazil is a rising star of world ag production and P consumption Country Brazil China India Russia USA Employment in agriculture, % of total Rural population, mn Rural population, % of total 15% 47% 68% 26% 19% Total population, mn 197 1,3751, Farm Holdings, mn Value added in agriculture, % of GDP < 1 Arable land per capita, ha Ag products net exports* from Brazil Ag products net exports India Ag products net exports China Growing P consumption is secured by imports Water resources per capita, m 3 /cap P 2 O 5 consumption, mn t P 2 O 5 consumption, % of world total 9% 36% 15% 1% 9% Comment 3 CAGR , % +16% 1,957 2,97 2,137 2,2 1,633 1,448 1,519 1,379 1,73 2, MAP/DAP imports to Brazil, kt of P2O5 MAP/DAP consumption in Brazil, kt P2O5 Source: World bank, IFA, FAO, CRU Note:(1) data provided for 212, unless otherwise stated (*) Net export equals ag production exports less ag production imports Brazil accounted for.4% of world phosphate rock resources and 9% of world P 2 O 5 consumption Agricultural exports are a key driver of Brazil ag production growth 19

20 Food consumption, kcal/capita/day mn t mn ha Brazil is a top ag exporter among developing countries Exports are a key driver for ag production growth Soybeans drive ag production in Brazil 5% 5 37% 39% 4 CAGR: 6% 27% 3% 23% 17% 3 2 8% 6% 7% 1 Coffee Soybeans Sugar Corn Cotton % of world's production % of world's exports Soybeans (harvested area), Ha mn Corn (harvested area), Ha mn Domestic food consumption is relatively high USA 3,5 Russia EU China 3, Brazil 2,5 World median India 2, 1,5 1, 2, 3, 4, 5, GDP per capita, $US Source: USDA, CRU, FAO, FAO-OECD outlook Sugar Dietary changes are more important +2% +4% Fresh dairy products +11% 7 8 Vegetable oils % 9 1 Poultry meat CAGR +1% 7 8 Beef and veal (cwe)

21 Russia: key figures (1) PhosAgro dominates domestic phosphate market Murmansk Russia has abundant ag resources Country Russia China India Brazil USA Baltic sea St. Petersburg Novorossiysk Moscow Kirovsk Volkhov Cherepovets Balakovo Employment in agriculture, % of total Rural population, mn Rural population, % of total 26% 47% 68% 15% 19% Total population, mn 142 1,375 1, Farm Holdings, mn Value added in agriculture, % of GDP < 1 Arable land per capita, ha Water resources per capita, m 3 /cap P 2 O 5 consumption, mn t P 2 O 5 consumption, % of world total 1% 36% 15% 9% 9% Comment Black sea Distribution hubs Processing operations Export ports Mining operations Distribution hubs opened in 214 New branches opened in 214 Top 15 regions of NPK and MAP consumption Russia accounted for 2% of world phosphate rock resources and just 1% of world P 2 O 5 consumption Ample resources provide a good base for ag production growth Source: World bank, IFA, FAO, CRU Note:(1) data provided for 212, unless otherwise stated 21

22 Russia: potential for significant ag production growth Growing agriculture land use...and increased phosphate application rates... will result in higher yields Russia 45% Russia 1 Russia 2. India 62% India 54 India 2.9 USA 66% USA 27 USA 6.6 Brazil 76% Brazil 53 Brazil 4.2 EU 8% EU 2 EU 5. China 8% China 75 China 5.7 Major crops harvested area to arable land ratio, % Source: FAO, Integer 4kg 4.4t Phosphate application rate, kg P2O5/Ha Cereals yields, t/ha 22

23 Sales focus and Industry developments 23

24 213 Primary phosphate (1) trade flows World DAP/MAP trade: 21.3 mn t PhosAgro (2) x.x Import volumes, mn t x.x Export volumes, mn t x.xx Freight costs, $US Source: IFA, CRU, USITC, CFMW, PhosAgro estimate Note: (1) - DAP/MAP/NPK/NPKS (2) PhosAgro sales volumes 24

25 Supply demand balance P 2 O 5 : No changes in regional deficits by 22 mn t P 2 O 5 Oversupply regions Deficit regions North Africa South Africa Europe Latin America North America Oceania Middle East South Asia (incl. India) China Southea st Asia Demand Capacities Demand Capacities Demand Capacities Demand Capacities Source: IFA; McKinsey demand model; work group analysis 25 25

26 Urals Priorities: trade restrictions vs. health Cadmium restrictions Sokli Siilinjärvi Apatit 2.5 billion tonnes of apatite-nepheline ore European countries grouped by allowable cadmium level Maximum limits of cadmium in national fertilizers containing more than 5% P 2 O 5, mg/kg P 2 O 5 Strict limits 2 Medium limits ~55 Mild limits 9 Phophate rock Heavy metal content, mg/kg P 2 O 5 Cd As Pb Russia (Kola) South Africa USA Middle East Morocco Other N.Africa Source: European Council, National Fertilizer and Environmental Research Center, Tennessee Valley; TUV 26 26

27 New sales model to improve premium market access Our new sales strategy Roadmap Set up local sales offices in São Paulo, Zug and Warsaw sales office in São Paulo will cover Latin America markets sales office in Zug and Warsaw will cover Northern and Eastern Europe and potentially Southern Europe Zug Domestic sales platform Warsaw Rationale High probability of selling entire market volume Building a deep understanding of end buyers and market tendencies Ability to promote PhosAgro products (without cadmium, ammonium NPK) Necessity of finding and hiring local managers with a developed client base São Paulo Singapore DAP/MAP NP/NPK/NPS Urea Sales volumes, kt Latin America New sale offices Existing sale offices Northern and Eastern Europe Source: PhosAgro 27 27

28 PhosAgro became the #1 overall supplier of fertilizers to the Russian market in 214, and continues to grow its market share Fertilizers sales in Russia, 214 kt Market share Percent NPK MAP/DAP Ammonium nitrate Urea Total PhosAgro % 18% 15% Eurochem % 17% 17% Uralchem % 12% 16% SDS-Group % 14% 14% Acron % 15% 13% Rossosh % 6% 8% Kuybishev % 7% 6% Source: RAPU Russian association of fertilizer producers 28 28

29 Recent industry developments Morocco controls most of world phosphate ore reserves Russia 2% Others 5% USA 2% Jordan 2% Algeria 3% Syria 3% China 5% Morocco Iraq 8% and Western Sahara 7% RUSSIA +1 mn t Net addition to phosphate rock production capacities (excl. China) of 14 mn t with.8% CAGR 1.3 bln USA -1 mn t 1.4 bln CF sold its phos business to Mosaic in 213 MOROCCO +5.9 mn t FINLAND +.5 mn t SYRIA +1.8 mn t JORDAN +1.5 mn t 1.5 bln 1.8 bln Mosaic and Ma aden announced JV in bln Missphos filed for bankruptcy in bln SAUDI ARABIA +5 mn t CHINA +5 mn t VIETNAM +1.7 mn t PERU +3 mn t BRAZIL +2.5 mn t Potash Corp and OCP announced JV in bln.31 bln AUSTRALIA +1.2 mn t - Greenfield - Brownfield - Reserves.25 bln Source: CRU, USGS 29

30 PhosAgro MENA MENA China N. America China China India China Cash cost, $US/t Estimated MAP/DAP business cash cost curve $US/t FOB (1) DAP FOB Tampa: $464/t Weighted by capacity avg. cost : $362/t Morocco in Q4 214 Estimated with feedstock prices set forth below: Ammonia: $46/t, CFR, Tampa $42-425/t, CFR, N. Africa Sulphur: $137/l.t, CFR, Tampa $14-145/t, CFR, N. Africa MAP/DAP Capacity, mln t Source: PhosAgro estimates, CRU, Fertecon, Integer, Argus-FMB, PhosAgro Note: (1) MAP/DAP business cash cost est. are based on feedstock prices in Q1 215, on site's specific location relative to FOB Morocco and its product nutrient content relative to DAP USD/RUB exchange rate of RUB applied for calculation MAP/DAP business cash cost 3

31 Current capacity New plant Strategy for fertilizer volume growth Phosphate rock External sales Internal consumption Where we are in 214 Total: 7.5 mn t 32% 68% Overall 6.5 mn t AN UREA prill 1. SOP STPP MCP Total: 7.5 mn t Where we are headed (217-22) 23% 77% +25% Overall 8.1 mn t Amm.sulph..3 Ammonia.3 UREA gran.5 MAP/DAP.5 NPK/NPS AN.5 UREA prill 1. SOP.1 STPP.1 MCP.2 Ammonia kt Current deficit MAP DAP NPS APP PKS Total: 1,946 kt 76 Current deficit Excess for future growth MAP DAP NPS APP PKS ,186 1,388 NPK 1.9 1,186 Deficiency covered by the new ammonia capacity NPK 1.9 Capacity Consumption Capacity Source: PhosAgro 15 31

32 Increasing production volumes and product assortment Fertilizers, feed phosphates and other finished goods Key factors driving year-on-year production growth in 1H 215 Finished goods growth outlook for PhosAgro-Cherepovets tonnes 4, 3,5 3, 2,5 2, 1,5 1, 3,147 1, % 3,445 1,381 1,41 1,94 Ammonia MAP, DAP NPK, NPS, PKS Increase number of fertilizer grades from 23 (in 213) to 28, including PKS and NPS fertilizers (both containing sulphur) Commissioning of Main Shaft #2 and related infrastructure will enable increasing the capacity of the Kirov mine to 16.5 mln tonnes of ore per year (by 218) Commissioning of new ore mining capacity: +9m of the Kukisvumchorrskiy line of the underground crushing complex #2 Increased production of aluminium fluoride from 23 ths tonnes/year to 35 ths tonnes/year. tonnes +28% 3, 2,519 2,5 2, , , ,33 1, 2, ,66 24 Ammonia MAP DAP NPK, NPS AN, NP Urea Other H 214 1H 215 Urea, AN, NP MCP Other Implementing programme to improve operations and increase capacity of phosphate-based fertilizers H 214 1H 215 1H 218 Source: PhosAgro * - based on approved investment projects 32

33 Financial performance: Strong balance sheet 33

34 US$, mln US$, mn US$, mn US$, mln 1H215 and FY214 Revenue, EBITDA and Net Profit Revenue (1H214-1H215) EBITDA (1H214-1H215) Net Profit (1H214-1H215) 1,621 1, ,212 1,325 US$, mln Average DAP FOB Tampa US$ 469/t 44% US$ 458/t 29% % 4% 3% 2% 1% US$, mln % 231 3% % 3% 25% 2% 15% 1% 5% 1H214 1H215 Chemical fertilizers Apatite concentrate Tripolyphosphate Other sales Total revenues Revenue (FY ) 1H214 EBITDA 1H215 EBITDA margin EBITDA (FY ) % 1H214 1H215 Net profit Net profit margin Net Profit (FY ) % Total Revenue 3,42 3,387 3,283 3, ,713 2,572 2,479 2,555 Average DAP FOB Tampa US$ 62/t US$ 535/t 35% US$ 472/t 33% US$ 443/t 31% 1,24 1,123 23% % % 788 9% 8% % Chemical fertilizers Other sales Apatite concentrate Tripolyphosphate EBITDA 213 EBITDA margin Note: Applied average USD/RUB exchange rates: (211), 31.9 (212), (213), (214), (1H214), (1H 215) *Adjusted net profit is calculated for unrealized foreign exchange loss Adjusted net profit Net profit Net profit margin Adjusted net profit margin* % 34

35 Industry Broker Ratings 35

36 Peer valuations (Typically a 12 month outlook) # of Analysts Average Target Price Premium % 25% 17% 17% 16% 25% 17% 43% 6% 16% 31% -7% 27% Recommendations: Sells Holds Buys 18% 82% 5% 32% 64% 11% 39% 33% 2% 5% 47% 41% Phosagro Mosaic Agrium Incitec CF industries 18% 19% 25% 41% 59% 33% 32% Potash Corp 25% 25% 24% 2% 1% 8% Nitrogen 12% - 34% - 1% 11% % Phosphates 88% 44% 6% 24% - 22% % 2% 1% - - Potash - 56% 16% % 7% 48% 56% 1% - 1% 1% 48% 5% 69% 15% 62% 8% 45% 42% 45% 5% K+S SQM ICL Yara Innophos Uralkali Intrepid Positive outlook Negative outlook Sources: Bloomberg (25 August 215), PhosAgro analysis 36

37 Appendix 37

38 PhosAgro: the only pure play phosphates producer Gross profit breakdown by segment Average gross profit breakdown by segment for Phosphate segment gross profit margin Average gross profit margin of phosphate segment for % 1% 39% 33% 51% 19% 56% 34% 87% 61% 17% 16% 16% 67% 49% 33% 1% 11% (1) PhosAgro Ma'aden Mosaic Agrium PotashCorp PhosAgro Ma'aden PotashCorp Mosaic Agrium (1) Phosphate Nitrogen Potash Other Source: Capital IQ database, companies reports Note: (1) Excluding resale, retail and advanced technologies Source: Companies reports Note: (1) Wholesale 38

39 High quality production assets Apatit Resources (1) Highlights Apatite-nepheline ore: 2,5 mt Al 2 O 3 : 283 mn t REO (2) : 7.5 mn t Capacity by product Phosphate rock: 7.5 mn t Nepheline: 1.7 mn t Largest standalone global producer of high grade phosphate rock (3) Standard grade P 2 O 5 content of 39% Lowest hazardous element content among the major phosphate rock producing regions; benefits from low levels of radioactivity Balakovo branch of Apatit Highlights Capacity by product MAP/DAP/NPS: 1.2 mn t Feed phosphate (MCP): 24 kt Leading European producer of feed phosphate MCP Only Russian producer of MCP Novorossiysk Black sea Baltic sea Moscow PhosAgro-Trans (Transportation) St. Petersburg Operates around 7, railcars, of which the majority are mineral hoppers Volkhov Cherepovets Balakovo Murmansk Kirovsk Top 15 regions of NPK and MAP consumption Distribution hubs Export ports Distribution hubs opened in 214 PhosAgro-Region (Domestic distribution) Owns and operates eight distribution centres in Russia located in proximity to major agricultural regions of Russia (processed over 1.2mn tonnes in 212, largest distributor in Russia) Cherepovets production complex - largest in Europe PhosAgro-Cherepovets Capacity by product MAP/DAP/NPK/NPS: 3.1 mn t Ammonia: 1,186 kt AN/AN-based: 45 kt Urea: 5 kt APP: 14 kt Highlights AIF 3 : 24 kt Largest standalone phosphate fertilizers producer in Europe Largest standalone producer of sulphuric and phosphoric acids in Europe One of the largest standalone producers of urea, ammonia, AN/AN-based fertilizers in Russia Agro-Cherepovets Highlights Capacity by product Urea: 48 kt One of the most modern urea capacities in Russia Metachem Highlights Capacity by product Sulphuric acid: 215 kt Phosphoric acid: 8 kt of P 2 O 5 PKS: 1 kt Sulphate of potash (SOP): 8 kt Sodium tripolyphosphate (STPP): 13 kt Unique SOP granulating technology in Russia Close proximity to St. Petersburg sea port Source: PhosAgro (capacity as of December 31, 214), CRU, European Commission Note: (1) Measured and indicated, PhosAgro, IMC, JORC report June 211 (2) Rare earth oxides (3) Defined as phosphate rock with P 2 O 5 content over 35.7% 39

40 Flexible production capacity PhosAgro production capacities 214 (1), mln t MAP/DAP , mln t (2) Capacity growth End products DAP/MAP/NPK/NPS PKS Urea AN/AN-based fertilisers Liquid fertiliser (APP) Sulphate of potash (SOP) Sodium triphosphate (STPP) MAP/DAP/NPK: fully flexible production lines with NPK production NPK capacities , mln t (2).98 capacity of 1.85 mln t and NPS production Urea.45 capacity up to 1 mln t capacities % Electricity capacities , MW (2) % +21% Feed phosphates , mln t (2) Aluminum fluoride (ALF3) Phosphate rock Sulphuric acid capacities % Feed stock Nepheline Ammonia Phosphoric acid capacities , mln t of P 2 O 5 (2) % Nitrogen fertilizers Phosphate-based fertilizers and feed phosphates Source: PhosAgro Source: PhosAgro Note: (1) production capacities as of 31 December 214 (2) as of 31 December 211 and 31 December 214 4

41 EBITDA, $US mn RUB devaluation: EBITDA sensitivity (1) 1,6 1,4 1,2 1, RUB/USD: 8 RUB/USD: 55 DAP, $US in mln USD 215F DAP FOB Baltic price, $/tonne RUB/USD exchange rate Current market conditions Source: PhosAgro 41 Note: (1) EBITDA estimations are based on August 215 feedstock prices (ammonia, sulphur and potash)

42 CoGS (% of total) 1H 215 Cost of goods sold Cost of Goods Sold DAP production cash cost breakdown Chemical fertilizers and other products for resale Ammonium sulphate Heating Sulphur and sulphuric acid Fuel Ammonia Electricity RUB 32,864 mln USD 94 mln 5% 6% 11% RUB 41,45 mln USD 722 mln 5% 5% 1% 2% 3% 1% 5% 11% 5% 5% 3% 11% 5% 11% 8% 9% ExW, US$, 1H215 Phosphate rock 5% Other DAP production costs 14% Sulphur 22% Ammonia 14% Potash Natural gas Depreciation 15% 9% 12% Salaries and social contributions Materials and services 27% 24% 1H214 Source: PhosAgro RUB/USD rates: 1H 215: ; 1H 214: (1) Phosphate-based fertilizers, MCP, STPP and nitrogen fertilizers 1H215 42

43 Dividend history Post-IPO dividends per share, RUB per GDR, RUB per GDR, US$ 211 April-December Dividends ,97,29 1Q Recommended dividend for 2Q215* Subtotal for Total paid Post-IPO dividends paid Dividends, RUB bln Net profit attributable to PhosAgro shareholders, RUB bln Source: PhosAgro Note: (*) - for recommended dividend for 2Q 215 per GDR applied USD/RUB exchange rate (as of ) Payout ratio, % 211 (April-December) % % % % 1Q % Total % 43

44 Overview of debt Total debt and net debt / annualised EBITDA 3.5х 2.5х 1.5х.5х -.5х Public debt Eurobonds issued on February 213 (LPN) Issue size Corporate ratings Tenor Dividends Coupon frequency Spread Ba1 Moody s BBB- S&P $US 5 mln BB+ Fitch 5 years Semi annually mid swaps+ 32 bps; UST bps Coupon rate 4.24% Maturity Date 2/13/ х 3.29х 2.48х 2.29х 1.83х 1.3х 1.5х.91х 1.39х.77х.94х.44х.32х.13х.43х.45х.18х H х -.11х Total debt / EBITDA Net debt / EBITDA Net debt / EBITDA (excl. Apatit and PhosAgro-Cherepovets acquisition) Comment PhosAgro carefully manages its balance sheet and cost of financing for all current initiatives, including both the consolidation of subsidiaries and growth projects The Company s net debt to EBITDA ratio decreased to.94x as of 3 June 215, from 2.48x as of 31 December 214 Net debt at 3 June 215 stood at RUB 78.3 billion, down from RUB 93.1 billion at 31 December 214. Most of the Company s debt is denominated in USD as a natural hedge against primarily USDdenominated sales Fitch Ratings has affirmed the Company s longterm foreign currency Issuer Default Rating (IDR) of BB+/Stable. Standard & Poor s left PhosAgro s BBB-/Negative rating unchanged after that agency s downgrade of the Russian sovereign rating in January 215, while Moody s Investor Service adjusted the Company s long-term Issuer Rating to Ba1/Negative on 25 February 215, following its downgrade of the Russian Federation sovereign ceiling Source: PhosAgro 44

45 2HY after HY after 22 Debt Maturity Profile (1) Payment Schedule Debt Repayment Plan/ Outstanding Debt US$, mn Repayment of principle US$, mn Debt Outstanding ,22 Outstanding debt Committed undrowing lines ,944 1, , , Source: PhosAgro Note: (1) maturity profile as of June 3, 215 applied USD/RUB exchange estimate rate: 68,12 applied EUR/RUB exchange estimate rate: 76,67 45

46 Average Cadmium content in ppm Control of world s premium phosphate resource base Higher cadmium content in sedimentary rocks OCP 32% GCT 29% PCS 29.5% Mosaic 28.5% CF Industries 29% Phosphate rock with MER >.1 significantly increases costs for production of DAP 1 Agrium 33% 1 1 Eurochem 39 4% 37 38% Average Minor Element Ratio (MER) Note: Size of the bubble represents P 2 O 5 content in phosphate rock in excess of 28%, which is recognized as a minimum for production of high quality phosphate fertilizers Source: FERTECON, PhosAgro, companies data 9 46

47 Premium/discount to the most affordable Moroccan phosphate rock Phosphate ore affects production costs associated with impurities High grade phosphate rock Apatit (PhosAgro) The benchmark: K1 phosphate rock, made by OCP (Morocco) Important characteristics included:p 2 O 5 content, CaO content, MER, F and Cl Important characteristics not included: product variability, content of organic matter, and the maintenance cost implications of different rock characteristics. China USA Morocco Others Source: CRU Phosphate Rock Cost Report 214 edition 47

48 Key drivers of P 2 O 5 demand growth in Latin America Demand growth by country mn t Largest phosphate fertilizer consumers in Latin America by crops Soy bean Recommended application rates, kg/ha* Solutions N -5 PKS 1:2:25 P MOP ::6 Other Sugar cane K -83 N MAP 15:15:15 P 17-2 Urea 46:: Argentina.6 K MOP ::6 Mexico.3 Maize N 1-15 MAP 12:52: P 2-28 Urea 46:: K -42 MOP ::6 Brazil Grape N 8 NPK(S) 15:15:15(1) P 26 SOP ::5 K 66 Urea 46:: Wheat N 8-12 NPK 1:2:2 P 2-26 Urea 46:: 212E 22F Source: McKinsey Fertilizer Demand Model *IPNI (in nutrients: N nitrogen; P phosphorus in P2O5; K potassium in K2O) K

49 Key drivers of P 2 O 5 demand growth in Europe Demand growth structure mn t Largest phosphate fertilizer consumers in Europe by crops Wheat Recommended application rates, kg/ha* Solutions N 4-21 NPK(S) 15:15:15(1) P Urea 46:: K 4-13 Other Barley N 3-16 NPK(S) 15:15:15(1) P Urea 46:: Czech Republic Benelux Italy United Kingdom Germany Rape seed K 4-13 N 5-15 NPK(S) 15:15:15(1) P 3-9 Urea 46:: K 2-8 Poland.3.3 Maize N 2-15 DAP 18:46: P Urea 46:: Spain.4.4 K MOP ::6 France.5.5 Grape N 2-6 NPK(S) 15:15:15(1) P 4-11 SOP ::5 212E 22F K 8-22 Source: McKinsey Fertilizer Demand Model *Defra, 8 th edition, June 21, Fertilizer manual Spring sown (in nutrients: N nitrogen; P phosphorus in P2O5; K potassium in K2O) 49

50 India depends on P 2 O 5 imports India is the major purchaser of DAP/MAP World DAP/MAP Imports : ~9.5 mln t of P 2 O 5 per annum (*) and importer of feedstock for phosphates production Global Phosphoric Acid Imports of 3.9 mln t P 2 O 5 (*) Middle East 4% East Asia 13% FSU 2% Oceania 5% India 18% India Europe Asia (excl. India) Middle East Latin America North America Africa Others 1.9 Indian imports of phosphoric acid equal to 4.1 mln t of DAP Other South Asia 6% Latin America 26% Global Phosphate Rock Import of 26.3 mln t (*) India 6.8 Africa 5% Europe Asia (excl. India) North America Europe 15% North America 6% Latin America FSU Middle East Oceania Africa Others Indian imports of phosphate rock equal to 4.5 mln t of DAP Source: PhosAgro, FAI, IFA, Fertecon, Argus-FMB (*) Average

51 mln t Rs US$ P 2 O 5 /N ratio Uncertain policy for nutrient subsidies in India decrease fertilizer imports and unbalance fertilization Evolution of N : P 2 O 5 : K 2 O ratio in India India DAP imports and Rupee exchange rate India DAP imports USDINR exchange rate Source: PhosAgro, FAI, IFA, Fertecon, Argus-FMB N P 2 O 5 K 2 O Balanced ratio / / / Nutrient Based Subsidy (NBS) Rates in India (Rs/kg nutrient) N P 2 O 5 K 2 O 211/ / / / /16e /211 Change -23% -42% -42% Indian domestic price is twice above the current subsidy level Unbalanced fertilization Subsidy, US$/t Subsidy and Retail Price, US$/t P2O5/N ratio P2O5/n balanced ratio Import Price, US$/t, CFR Retail Price, US$/t 65%

52 India subsidies, INR bn Drop in commodity prices supports budget rebalancing 3, 2,5 $/bbl 15.8% 12 Commodity prices and Indian fertilizer subsidies 18.6% 18.2% 17.% 16.3% 15.9% 13.7% 8 7 Brent oil - 5% 2, 1 6 DAP - 27% 1,5 1, Urea MOP Wheat & Rice basket - 49% - 4% - 32% INR devaluation % 29/1 21/11 211/12 212/13 213/14 214/15 215/16 215/16 Budget Food Indigenous urea Brent oil, $/bbl INR/USD Imported urea P & K fertilizers Urea prilled, $/t FOB Yuzhniy Petroleum Other subsidies DAP FOB, $/t US Gulf/Tampa % of subsidies in Indian budget MOP standard, $/t FOB bulk FSU (Baltic) Wheat & Rice basket price, $/t Source: CRU Fertilizer Week, Indian government, Capital IQ 52

53 Potash Natural gas Ammonia Sulphur Sulphuric acid Phosphoric acid Phosphate ore Beneficiation Need for a combination of feedstocks and complexity of production process act as barriers to entry Integrated phosphate-based production model (1) Replacement cost Ma aden 15.9 mln t (12.9% P 2 O 5 ) 4.6 mln t (39% P2O5) Key products Production facilities Capacity, mln t p.a. DAP CAPEX, mln $US MAP, DAP, NPK, NPS, Urea, AN Replacement Capacity, cost, mln t p.a. mln $US Mining and beneficiation 5. 1, , mln t 4.2 mln t Sulphuric acid Phosphoric acid Ammonia , 1.7 mln t Phosphate fertilizer Nitrogen fertilizer mln m 3.73 mln t End products DAP / MAP /NPS 2.45 mln t Infrastructure and other ~ 2, ~ 4, Total ~ US$ 6 bln ~ US$ 1 bln Current capitalization US$ 4.6 bln (2).77 mln t NPK 1.85 mln t Ma aden total est. CAPEX (3) : US$ 6 bln Construction period: 6 years + Over US$ 2,/tonne Source: PhosAgro, Maaden, Fertecon, Integer, Reuter Note: (1) Based on PhosAgro s consumption ratios (2) Bloomberg, as of April 214 (3) CAPEX for the Phosphate Project 53

54 Access to abundant local resources Russian Federation Potash Consumption in Russia 2.1 mln.t PhosAgro Biggest consumer Belaruskali Potash Production 8. mlt t Farmers 1% others 2% Uralchem 7% Eurochem 8% PhosAgro 34% Minudobrenia- Rossosch 16% Acron 23% current supply Uralkali Potash Production 9. mlt t Sulphur Consumption in Russia 3.6 mln.t PhosAgro Biggest consumer Belarus Potash Consumption in Belarus 1.6 mln t potential supply PhosAgro 44% Merchant S. Acid.7 mln.t S GazpromSulphur 2.6 mln.t S others 56% Import (Kazakhstan).3 mln.t S Source: IFA, Belstat, PhosAgro. Data for

55 Commissioning phosphate rock and phosphoric acid capacities Delays in addition of new phosphate rock capacities (excl. China) Changes in world fertilizer capacities (excl. China) 18 mln t years 5 years mln t nutrients IFA-28 IFA-213 Delays in commissioning phosphoric acid capacities (excl. China) mln t P 2 O IFA-28 IFA-213 Source: IFA, PhosAgro 5 years Nitrogen Phosphates Less new projects are announced in phosphates Commissioning of new capacities is delayed Shutdown in phosphate fertilizer capacities was more significant while less new commissioning in the past 5 years in comparison with nitrogen and potash sectors

56 Timing and completion of new capacities is uncertain mln t of P 2 O 5 Utilization rate of 76% Utilization rate of 83% OCP seeks to extract the maximum value from its phosphate ore reserve. Management has recently indicated that they will match production to market demand Joint Venture Mosaic and Ma aden estimated cost USD 7 bln Total Production 214 Total Capacities 214 Closures OCP firm USA, China Ma aden II Other firm projects Probable/ Speculative projects Total Expected Capacities 219 Total Expected Production 219 Source: CRU, companies data 56

57 PhosAgro MENA MENA China China Cash cost, $US/t 35 Estimated Urea export cash cost curve $US/t FOB (1) Yuzhny in Q $28-283/t, FOB Black sea Urea exports, mn t/year Source: PhosAgro estimates, CRU, Fertecon, IFA, Argus-FMB Note: (1) Urea cash cost estimates are based on feedstock prices in Q1 215 USD/RUB exchange rate of RUB applied for calculation urea export cash cost 57

58 Stock/GDR performance 58

59 Rebased to 1 Share price performance 12 Share buybacks: Mosaic PhosAgro Mosaic Potash Corp ICL Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Peer companies PhosAgro Mosaic ICL Potash Corp Share price performance July 214 August % (15%) (24%) (29%) Market cap, USD bln Buybacks (July 214-August 215), USD bln Sources: Bloomberg, PhosAgro 59

60 GDR mn $US PhosAgro GDR performance Capital markets day 12 SPO 16 1 Uralkali announced split with BPC $US Announcement of GDRs inclusion into the FTSE Global Equity Index Series and the FTSE All World Equity Index Series ADTV $US4.1 mn or GDR 36 k ADTV $US3.5 mn or GDR 351 k Geopolitical unrest ADTV $US1.7 mn or GDR 141 k ADTV $US1.7 mn or GDR 15 k ADTV $USD 2.1 mn 4 or GDR 164 k 2 Source: Bloomberg (as of August 25, 215) Trade volumes, GDRs mn 6 PhosAgro GDRs, $US mn

61 Rebased to 1 Daily Turnover, $US mn Global political and economic instability 19 Uralkali announced split with BPC Ukraine crisis development: Malaysian Airlines flight shot down 5 17 European debt crisis development: Greek debt restructuring Russia-Crimea unification Daily Turnover PhosAgro GDRs MSCI Russia MICEX FTSE IOB Russia % Performance PhosAgro FTSE IOB Russia MSCI Russia MICEX Since PhosAgro inclusion in Dow Jones Islamic BRIC Index 69.4% (41.%) (43.%) 2.2% Since Russia-Crimea unification 42.% (31.4%) (32.2%) 29.6% 1 month 5.5% (15.9%) (15.8%) 1.7%) 1 week (1.%) (7.4%) (7.4%) (1.8%) Source: Bloomberg (as of August 25, 215), PhosAgro analysis 61

62 EV/EBITDA performance relative to peers Current discount to peer EV/EBITDA average: 37% Bloomberg EV/EBITDA consensus FY 215 PhosAgro Discount Discount to peer EV/EBITDA* average: 25% % Mosaic 7.5x 31% Potash Corp 9.8x 48% Uralkali 7.1x 28% Peer average 8.1x 37% PhosAgro 5.1x 2 PHOR LI URKA LI MOS US POT US Peers avg Source: Bloomberg (as of August 25, 215), PhosAgro analysis 62

63 Thank you! 63