Morocco's OCP turnover exceeds MAD 114 billion in 2022

The Cherifien Office of Phosphates (OCP) group ended 2022 with new record breaking achievements, thanks to the rise in fertilizer prices at the international level, and its efforts to rationalize production costs.

According to a statement of financial results issued by the leading group in the fertilizer industry, the number of OCP’s transactions amounted to MAD 114.6 billion, compared to MAD 84.3 billion in 2021.

Commenting on the results, the company’s managers said: “The year 2022 was full of achievements and records, as the group recorded exceptional operational and financial performance, supported by the high prices of its product range, as well as the continuous efforts to rationalize production costs and operational performance.”

“The group succeeded in occupying the forefront of the phosphate industries, which reflects its competitive advantages represented in its industrial and commercial flexibility and its continuous measures to maintain its leadership in terms of costs. This performance is also testament to OCP Group’s aggressive growth strategy and commitment to long-term value creation.”

Over the past year, phosphate fertilizer prices have risen to exceptional levels supported by several key factors, including supply chain disruptions, export restrictions and high input costs. OCP Group has shown great flexibility while making the most of this upward trend, as well as adjusting its production to match demand.

The group succeeded in achieving a remarkable double-digit growth in the turnover in 2022, driven by a 44% increase in fertilizers, which accounted for 64% of the total turnover compared to 61% last year.

The group has confirmed its strong commitment to the geographical diversity of customers, and focus on marketing products in markets with strong demand, such as South America, Asia and Africa. This strategy has been a great success, reflecting the strong position of the group in these markets, as well as its ability to adapt to the needs of customers.

According to the financial results data, last year’s supply chain disruptions linked to the Russia-Ukraine conflict, coupled with a decline in Chinese exports, contributed to record fertilizer prices.

Starting from the third quarter of the year, the prices of phosphate fertilizers recorded a gradual decline, which reflects the decline in demand due to the deterioration of the financial situation of farmers, as most of the major markets witnessed a collapse in demand, especially in Brazil, Europe and the United States of America, which also suffered from turbulent weather conditions. By contrast, India increased its imports due to lower stock levels and higher government subsidies.

In light of this circumstance, the group’s turnover increased by 36% compared to last year, reaching MAD 114.5 billion, which mainly reflects the increase in prices in the three sectors, which contributed to offsetting the decrease in sales volume.

The number of phosphate rock transactions increased by 51% year-on-year; This is mainly due to the improvement in prices that accompanied the decrease in the volume of exports towards the main importing regions.

The phosphoric acid turnover also recorded a slight increase by 1% on an annual basis, and the increase in its prices contributed mainly to offsetting the decrease in the volume of exports to Europe and India. While the decrease in sales volumes to India is mainly due to the development of the product mix in favor of fertilizers and the postponement of the import of phosphoric acid to the second quarter of the year.

As for fertilizers, the number of transactions increased by 44% compared to 2021, thanks to the increase in sales prices, which compensated for the impact of the decrease in the volume of exports, while the unfavorable economic conditions for farmers associated with the rise in prices contributed to the decline in global demand.

Regarding gross profit margin, it reached MAD 70 billion, compared to MAD 55.8 billion in 2021. While the improvement in selling prices led to compensation for the costs of raw materials, especially ammonia and sulfur.

Crude profit before interest, tax and depreciation (EBITDA) also recorded an increase of 38% compared to last year, reaching MAD 50 billion, compared to MAD 36.2 billion in 2021. The improvement in sales prices as well as the operational effectiveness of the group led to achieving a profit margin (EBITDA) within the range 44%.

Highlights
During the past year, the OCP Group launched many important initiatives to help African farmers during this period, which witnessed a significant increase in prices, by distributing more than half a million tons of fertilizers in 2022, with the aim of mitigating the impact of high raw material prices and drought. The initiative has targeted more than 4 million farmers on the continent. A commitment was also made to allocate 4 million tons of fertilizers for the benefit of African farmers in 2023.

The fertilizer supply program will include an aspect related to training and capacity strengthening in partnership with local actors, in line with the group’s approach that places farmers at the center of attention. These subsidies will make it possible to ensure the availability of quality fertilizers throughout the continent, with the aim of raising the incomes of 44 million farmers in 35 countries.

Last year constituted an important stage in the group’s investments, as the second phase of its investment program was launched, which includes an investment of about $13 billion during the period from 2023 to 2027, and is based on raising mining capacities and fertilizer production, with a commitment to achieving carbon neutrality by the year 2040.

This investment program aims to raise production capacities from 12 million tons of fertilizers currently to 20 million tons by 2027, in addition to increasing mining capacities through the opening of a new mine in Mesqala, in addition to establishing a chemical compound for fertilizer production in Muzaina.

The investment program of the OCP Group is based on the horizon of the year 2027 on the production of 1 million tons of green ammonia, the production of 5 gigawatts of clean energy, and the desalination of sea water with a production of 560 million cubic meters, of which 110 million cubic meters in the year 2023, thanks to the operation of several seawater desalination plants.

In terms of specific chemical products, the group is expected to produce 20,000 tons of fluorine and 30,000 tons of intermediate products for lithium-iron-phosphate batteries by 2027.