eurochem-annual-report-2011

Business review
Management report
Income statement
34%
increase in revenue
52 EuroChem Annual Report and Accounts 2011
Revenues
The favourable shifts in the production structure and the strong product pricing environment prevailing
throughout most of the year boosted our consolidated revenues 34% to RUB 131.3bn, a new Company
record. The Group’s EBITDA margin grew seven percentage points to 38% on full-year EBITDA of RUB 49.7bn.
Revenue structure
2011 2010 2009
RUBm % change RUBm % change RUBm
Nitrogen 63,108 34% 47,222 19% 39,577
Phosphates 63,925 32% 48,502 56% 31,124
Distribution 13,974 64% 8,544 58% 5,395
Other* (9,709) 50% (6,480) 157% (2,519)
Total 131,298 34% 97,788 33% 73,577
* Including revenue from segment ‘Other’ and elimination of internal sales.
Sales outside Russia grew 34% in 2011 and accounted for 76% of total Group sales. In the context of
a weakening Russian rouble in 2011, this increase in non-rouble-denominated sales further improved our
results in rouble terms. Full-year sales outside Russia accounted for 75% and 78% of the Nitrogen and
Phosphate segments, respectively. Sales of iron ore and baddeleyite, which are both co-products of our
phosphate rock mining operations at Kovdorskiy GOK, generated 26% of the Group’s EBITDA in 2011
(2010: 25%).
As highlighted in the table below, volumes had a negligible effect on revenue growth in 2011. The
year’s strong fertilizer pricing environment, especially on the nitrogen side as a result of a shift to more
value-added products, was the key revenue driver for us in 2011. While production volumes grew for
the first nine months of the year, the sharp demand contraction that materialized in the last few months
of the year eroded many of the gains which had been achieved over the previous year. As a result of lower
production volumes on lower-Fe-content apatite rock mining, iron ore volumes decreased substantially;
however, this was mitigated by higher than expected average iron ore prices.
Revenue drivers – volume, prices
Total change in revenues
(RUBm)
Volume
effect
2011/2010 2010/2009
Price
effect Other Total
Volume
effect
Price
effect Other Total
Nitrogen 425 14,950 – 15,375 387 5,360 – 5,747
Phosphates 122 8,427 – 8,549 5,887 12,228 – 18,115
Mining (1,328) 7,997 – 6,669 – – – –
Resale 1,147 1,183 – 2,330 – – – –
Other sales – – 587 587 – – 347 347
Total 367 32,557 587 33,511 6,274 17,589 347 24,210