Leading Fertilizer Producers Show Record Profitability
Thursday October 12, 3:00 am ET
LONDON, October 12 /PRNewswire/ -- Leading fertilizer producers achieved record profits and profit margins in 2005. A study of the world's 60 leading fertilizer producers published by Integer Research has revealed they have combined fertilizer revenues of US$43 billion in 2004, and more than US$50 billion in 2005.
"This 16% increase is partly due to higher fertilizer sales prices, combined with increased global fertilizer consumption," says Integer's Director, Oliver Hatfield. "This shows that despite the high gas prices, which have affected overall production costs, there are still significant profits and increasing revenues."
The majority of fertilizer revenues are concentrated amongst the top 20 companies. They have combined fertilizer revenues of US$35.8 billion, compared to the US$14.6 billion for the remaining 40 companies. This constitutes just over 70% of total fertilizer revenues for the top 60 companies.
"Based on fertilizer revenues, Yara is still the biggest fertilizer company in the world, and it continues to expand its business with significant developments in Brazil and China," says Integer's Analyst, Nora Gombos. "Potashcorp, ranked at number three behind Mosaic, is also extending its distribution network and interests through ownership stakes in overseas companies."
"The five largest companies are still based in North America and West Europe. However, the other companies in the top ten have changed in the last few years. Eurochem of Russia has risen through the rankings into the top ten, moving Terra Industries into 11th position. This means that in the top ten, the number of companies based outside the established developed regions increased from three to four."
"This is a trend that may continue, with nitrogen producers from Russia, Ukraine and the Middle East taking advantage of the high fertilizer prices, and relatively low gas costs. If you look at the net profit margins for 2005, the leading company is Qafco, with a net profit margin of 60%, followed by China BlueChemical and Abu Qir," says Hatfield.
"Other companies that have shown strong profits are the potash producers, including Uralkali, Arab Potash and Silvinit. The potash and nitrogen businesses had a bumper year in 2005, with many companies achieving record profits and profit margins. In fact, nearly every company in the top 60 made a net profit. The net profit margins for the top 60 producers averaged 11.7% in 2005, above the industry average of 10.8% in 2004. This is a good indicator of the health of the industry."
"China is becoming more influential in the global fertilizer market," says Gombos. "There are now nine Chinese companies in the top 60, whereas there were only four in 2003, and three the year before. The reason for this is the increased consolidation in China, and the improved disclosure of company information."
Source: Integer Research Ltd
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