OCP reported an “exceptional” increase in its income and turnover compared to last year, in its latest earnings report, detailing the phosphate giant’s performance until June 30, 2022.
“OCP achieved exceptional financial performance in the first half of 2022,” a comment from the company’s management in the official press release said. “An increase in product prices, combined with constant efforts to optimize production cost and operational efficiency, resulted in an EBITDA margin of 50%, among the best in the sector.”
Turnover during the first half of 2022 came in at MAD 56 billion ($5.2 billion), a large increase from last year’s figure of MAD 32 billion ($2.9 billion). Meanwhile, the company’s net income stood at MAD 28 billion ($2.6 billion), more than double last year’s MAD 12.5 ($11 billion).
The increase in income was attributed partially to the global rise in fertilizer prices. With Russia and Ukraine being two of the world’s biggest fertilizer producers and exporters, the war between them has disrupted fertilizer markets and traditional supply chains, while OCP has managed to increase production and exports while its international competitors have struggled to keep production at pre-2022 levels..
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A reduction of exports from China also raised prices, affecting accessibility and allowing the Moroccan firm to fulfill growing demand.
Boosting food security
With the global population continuing to grow, food security is becoming an increasingly pressing issue. Moreover, with international organizations warning of the waning supply of fertilizer, Morocco’s OCP – which manages 70% of the world’s phosphates reserves – sees the current international climate as an opportunity.
Noting its “engagement to preserve global food security and a farmer-focused mission,” OCP emphasized its efforts to help smallholder farmers in Africa during these difficult times. The company recently launched the largest ever fertilizer assistance program, coming in at 550,000 tonnes of fertilizer that was either donated, or sold at discounted prices, to African farmers.
The remarkable OCP program alone covers 16% of the continent’s needs. Africa continues to face dire food security concerns, as the Ukraine crisis has stopped food exports to the continent, and climate change continues to affect continental agricultural output.
At a time when most international competitors are reducing production and reporting weaker output numbers, OCP’s strong performance stands out.
OCP’s international competitors
Russia’s PhosAgro has predictably suffered from the Ukraine war, with board members stepping down and the company’s funds being frozen. And although the company’s revenues increased thanks to higher prices, Russian fertilizer exports fell in 2022, affecting not only Europe but Africa as well, where PhosAgro was in the midst of expanding.
The gas and energy crisis in Europe forced major manufacturers such as Norway’s Yara to cut its ammonia capacity to a third this year, with researchers estimating that Europe has lost half of its ammonia capacity and 33% of its nitrogen fertilizer production.
American fertilizer giant Mosaic similarly reported a cut in production in 2022, despite recording significantly more Profits than last year. With US farmers demanding more production and escalating their calls to lift tariffs on Moroccan fertilizers, Mosaic’s stranglehold on the American market is under significant pressure.
Politicians in the US have been calling on President Joe Biden to lift the tariffs on OCP’s products, citing the increasing cost of fertilizers and that the product’s affordability as critical to bringing the country’s inflation under control.
This global landscape not only puts OCP’s recent numbers into perspective, but shows that there is a growing void in the market that OCP may be able to fill with its increased production and its growing status as a reliable supplier, even in tumultuous times.
SOURCE: Morocco news
