25 February 2019

OCI N.V. Reports 2018 Results

Download PDF


  • Strong free cash flow generation of $305 million and a reduction in net debt of $295 million during the fourth quarter of 2018
  • Own-produced volumes sold increased 20% during Q4 2018 compared to Q4 2017 resulting in a record 9.4 million metric tons for the full year 2018
  • Revenues increased 47% during Q4 2018 versus Q4 2017 driven by higher volumes and higher selling prices
  • Adjusted EBITDA increased 102% to $269 million in Q4 2018 from $133 million in Q4 2017 driven by the higher revenues and higher margins
  • Adjusted net income improved to $17 million in Q4 2018 from a loss of $53 million in Q4 2017
  • The improvement in leverage metrics continued with a trailing net debt / adjusted EBITDA of 4.4x at 31 December 2018, down from 7.0x at 31 December 2017 and 5.5x at 30 September 2018

Statement from the Chief Executive Officer – Nassef Sawiris:

“We ended 2018 with a robust quarter. We more than doubled our Adjusted EBITDA compared to the same quarter a year ago and generated strong free cash flow which delivered a significant reduction of $295 million in net debt during the fourth quarter and excellent progress on our deleveraging priority.

This growth demonstrates that our previous investments in new capacities are starting to pay off with a solid performance at Iowa Fertilizer Company and the ramp-up and first cash dividend from Natgasoline. We achieved this volume and earnings growth despite a shutdown at Natgasoline during the fourth quarter due to utilities supply issues that have now been resolved, coupled with low water levels in the Rhine which affected despatches of CAN in Europe.

As a company we view selling forward large quantities of product to wholesalers during the low season at low prices as value destructive, as it creates an unnecessary overhang in the market when distributors become competitors during the peak season. We believe that our approach, combined with our strategic locations, and the strong execution of our operational teams has allowed us to capture the benefits of a rising pricing environment during the third and fourth quarters of 2018, maximize netback prices and outperform the industry in North America.

Our positioning in the Upper Midwest of the United States is unique and gives us significant freight and logistical advantages. This becomes even more prominent in the spring season, when the availability of river barges and other logistical challenges (such as congestion on the rivers and railroads) become a bottleneck for product that is to be transported into the Midwest originating from New Orleans (NOLA).

We expect our low-cost operations in the United States to be a key source of growth in 2019. Towards the end of 2018, IFCo reached record production levels of 115% of nameplate capacity as a result of both optimization work and an increase in our permitted production levels as described last quarter. This has resulted in a significant improvement in EBITDA performance at IFCo during the fourth quarter. We expect continued improvement at IFCo in 2019 due to several factors, including consistent production performance, the full effect of the increase in allowable operating rates, and a significant increase in diesel exhaust fluid volumes.

We also expect our methanol business to grow in 2019 to reach 2.95 million metric tons of proportionate production capacity. Natgasoline will have its first full year of operations, BioMCN’s second line is due to start up this spring and we expect to finalize the c.13% methanol capacity increase at OCI Beaumont this summer.”


Focus on Nitrogen Products

Our diversified portfolio of nitrogen products consists of fertilizer, diesel exhaust fluid and melamine:

  • Short term, we expect a portion of our sold fertilizer volumes to shift from the first into the second quarter as demand starts picking up in March / April. Our disciplined sales approach will result in some inventory build-up towards the end of the quarter.
  • Nitrogen prices have declined at the beginning of 2019 as a result of the impact of a delayed application season and continued exports from Iran, but we expect global demand to materialize through 2019 as seasonal demand kicks in.
  • The outlook is especially strong in the US for the second quarter of 2019: in Q4 2018, ammonia application rates were at historically low levels due to inclement weather, which we expect to result in a boost in demand in spring. In addition, the US Department of Agriculture (USDA) recently estimated that an additional 3 million acres of corn will be planted in the US this season which is supportive of nitrogen demand.
  • We continue to expect a tightening of the global supply and demand balance with new capacity additions below historical trend demand growth of c.2% per annum and exports from China at low levels.
  • Melamine remains a cornerstone of our Dutch operations, enjoying another good performance in 2018 with contract prices on average 8% higher than the year before and a stable performance in the past few quarters. We expect to continue to capture healthy margins for this business.
  • The outlook for the diesel exhaust fluid market in the US remains positive and is expected to grow at rates over 15% per annum in the coming years.
  • As a result of the recent DEF plant expansion, investment in related infrastructure, and the establishment of the N-7 joint venture, we have already concluded several 2019 contracts totalling more than double the DEF sales volumes achieved in 2018.

Focus on Methanol

Fundamentals of methanol markets are unchanged:

  • For methanol we also expect limited new major capacity additions in the next 4-5 years relative to expected demand growth rates in the mid-single digits.
  • Following some price weakness at the end of 2018 due to the decrease in oil prices and lower utilization rates at MTO facilities in China, prices have rebounded in the past weeks, and markets in Asia have picked up after Chinese New Year.
  • Firming oil prices, increasing utilization rates of methanol-to-olefins (MTO) plants and the addition of multiple new MTO facilities in China should be supportive for methanol prices and demand.

Gas Markets

Our cost position is looking favourable with a low blended average natural gas cost. We have a mix of long-term contracts with fixed gas prices in Egypt and Algeria, and spot prices in Europe and the Unites States.

Gas prices have moderated in both Europe and the United States since the levels reached in 2018. We expect to see the full benefit of the lower gas prices from the second quarter onwards as our European winter exposure hedges expire. In the United States, we continue to benefit from the hedges of $2.42 per mmBtu at IFCo for the majority of our gas needs in Q1 and have secured prices below $2.30 per mmBtu for Q2.


Despite US sanctions, Iran has continued to export significant volumes at heavily discounted prices in recent months, negatively impacting methanol and fertilizer markets. With export volumes of more than 4 million tons each of urea and methanol in 2018, Iran is one of the largest exporters of both these products globally. However, as sanctions are now being fully implemented and export opportunities for the country diminish, Iranian exports are likely to decline in 2019.

We are well-positioned to benefit from improving end markets through the unique strategic positioning of our assets in key regions, our globally competitive low-cost asset base and best-in-class free cash flow conversion.

We expect continued growth in EBITDA and improvement of our leverage metrics in 2019. Net interest and capital expenditures are expected to decrease in 2019, which should contribute positively to our cash flows:

  • Interest expense of $341 million in 2018 is expected to decrease by $50-70 million in 2019, also benefiting from a 50bps step-down with every half turn in net debt to EBITDA metrics on OCI NV’s bank facilities.
  • Capital expenditures are expected to be c.$200-220 million, of which around $150-160 million for maintenance capital expenditure and an estimated $50-60 million for growth, including the capacity expansion at OCI Beaumont.

We remain committed to our financial policy to prioritise these expected strong free cash flows towards deleveraging to 2x through the cycle.


A conference call for investors and analysts will be hosted on Tuesday 26th February 2019 at 3:30 PM CET (2:30 PM GMT, 9:30 AM ET) by Nassef Sawiris, Chief Executive Officer, and Hassan Badrawi, Chief Financial Officer.

Investors can access the call by dialing:

Standard International:                +44 (0) 20 3009 5710
United Kingdom FreeCall:           0800 376 7425
Netherlands LocalCall:                +31 (0) 20 715 7366
United States FreeCall:               1 (866) 869 2321

Conference ID:                           1870057

A conference call replay will be available until 26th March 2019. The replay access numbers are:

Standard International:                +44 (0) 333 300 9785
Netherlands:                                 020 713 2967
United States:                              1 (866) 331-1332

Conference ID:                           1870057


Subscribe to email updates

Subscribe for news and stories about our business, industries, and products.

Thank you for subscribing.

Lines Effect