Economic sustainability

Our financial success is a function of our ambition, strategy, execution, our people and our ability to engage with those living and working around us.

Economic performance

The Board of Directors oversees all aspects of our financial performance. Overall management responsibility is in the hands of the Chief Financial Officer (CFO), to whom the finance heads of our operating companies report.

Our financial performance is predicated on the continued consumption of fertilizers at a sustained price, which in turn is driven by growing population, changing diets and land use shifts. In order to make the most of this market opportunity while preparing for potential challenges and volatility our business aims to have the following attributes:

Global scale and market position
  • Russia’s largest fertilizer company and one of the top three in Europe
  • 26% and 19% market share in nitrogen and phosphate respectively in our home market and increasing overseas
  • Growing distribution and advisory revenues outside of Russia
  • Growing international production presence
  • Global product footprint – used in more than 100 countries accounting for 86% of output
Diversified and balanced market position
  • Positioned to withstand pricing pressures and demand volatility with a growing product range
  • Reduced dependence on seasonality
  • Further diversification when potash comes
  • On-stream with capacity of 8m tonnes per annum
Vertical integration
  • 75% self sufficiency in phosphate rock from Kovdorskiy, augmented, from 2015, with resources from our new operation in Kazakhstan
  • Iron ore, fluoride and acid by-products add to revenues
  • Acquisition of natural gas producer offers 20-25% self sufficiency and hedge against rising prices
  • Future cost leadership in potash, allied to owned rail hub at Gremyachaya and transhipment terminal at Tuapse
  • Effective, owned distribution network, including port terminals and rolling stock

Aspect

Why it is important

Who has a stake

Indicator

Economic performance

It is a fundamental measure of business health and supports our growth and investment plans

The Board, employees, investors

Annual sales

EBITDA

Net debt/EBITDA ratio

Ratings agencies

Policies and guidelines

Business strategy

Russian financial regulators

Federal Law on Natural Monopolies

Federal Law on Electric Power Industry

Code of Conduct

Code of Ethics

Aspect boundary
Internal and external

Our business supports employment, provides community services
and pays taxes in its main areas of operation.

Strong corporate governance

  • Experienced and independent Board members
  • Strong management team
  • Record of solid execution
  • Commitment to best practice and transparency
  • Focus on production and logistical efficiency improvements

Investing in our future

The highlights of our strategic investment and M&A programme in 2013 included:

  • Continued development of the Gremyachinskoe and Verkhnekamskoe potash deposits
  • Launch of drilling and blasting operations at Kok-Djon phosphate rock development in Kazakhstan
  • New ammonium nitrate plant at Novomoskovsky Azot
  • Integration of EuroChem Antwerpen, Belgium
  • Joint venture with Migao Corporation to produce potassium nitrate and NPK in Yunnan Province
  • Announced plan to create a urea and ammonium plant in Louisiana, USA

Financial performance and processes

  • RUB 176.9bn sales in 2013
  • RUB 43bn EBITDA in 2013
  • 2.07x net debt/EBITDA in 2013
  • BB ‘stable’ rating from Fitch and S&P

How we manage indirect economic impacts

Our relationships with and investments in local communities differ based on the nature of our operations and their locations. Some of our older operational sites have been an integral part of their local communities for many years.

For example, Lifosa celebrated its 50th anniversary in 2013 and EuroChem Antwerpen celebrates its 50th anniversary in 2016.

Our new sites such as VolgaKaliy, Usolskiy Potash, Ust-Luga (Russia) and Kok-Djon (Kazakhstan) have to establish relationships and partnerships while providing facilities for employees and communities, on which they may have a significant effect.

Our community investment strategy is defined and monitored at Board level and implemented by Directors of Finance, Administration, Communications and Human Resources, along with the Managing Directors and counterparts in the operating companies. Our community investment themes are sports, health, education, environment and charity.

Aspect

Why it is important

Who has a stake

Indicator

Indirect economic impacts

It relates to our market presence and the way we engage with local stakeholders where we operate

The Board, employees, suppliers, national government, local government, local communities

Level of investment

Feedback from government
and communities

Policies and guidelines

Business strategy

Russian financial regulators

Federal Law on Natural Monopolies

Federal Law on Electric
Power Industry

Code of Conduct

Code of Ethics

Aspect boundary
External

We operate in areas where our plants are amongst the most significant employers. While drawing on energy and natural resources we also generate significant economic opportunities.

Priority

Projects

Activity in 2013

Sports

Opportunities to achieve sporting goals

Support junior sports schools and public clubs

Sponsor competitions

Ice sports development with the Russian Ministry of Sport, Tourism & Youth

More than US$14m invested between 2009-2013 in sports facilities and competitions

Hockey arena opened in Nevinnomyssk

Multi-sports arena opened in Kingisepp

Organised international junior ice hockey and soccer tournaments

Brussels to ‘Moscou’ cycle ride

Health

Modernising healthcare facilities

Support for hospitals and medical units

Education

Support for schools

EuroChem chemistry classes

Support for regional education classes

Support for chemistry teachers

Financial assistance and infrastructure improvement for schools

E-generation progamme with schools, universities and teachers

Sponsored International Chemistry Olympiad

Training courses for employees

Environment

Waste disposal, water use reduction,
land reclamation projects

Community engagement

Ongoing environmental improvement projects
at Kedainiae, Novomoskovsk, Kingisepp
and Belorechensk

Ongoing site visits and engagement with community groups and environmental organisations. For example, Phosphorit’s work with the John Nurminen Foundation and Clean Sea Project or EuroChem Antwerpen’s Community Advisory Panel

Charity

Support for vulnerable groups

Partnerships with NGOs

Volunteering

Supported more than 70 organisations
including orphanages, veterans’ groups and charitable foundations

In 2013, more than 500 employees volunteered to help 30 community organisations

economicmap

  • NAME Felicitas Niebler
  • ROLE Controller, controlling finance management department
  • WHERE I WORK EuroChem AGRO
  • My view “I am proud of taking up a role with such a high level of responsibility straight after university – supporting management decisions, working independently and acting as a link between all departments.”
  • Story Felicitas joined the dual study programme at EuroChem Agro in Mannheim. She became part of an exciting company environment while receiving a business education at the Baden-Württemberg Cooperative State University in Mannheim (DHBW).
  • NAME Alexander Mezhevov
  • ROLE Phosphoric acid extraction production
  • WHERE I WORK Phosphorit
  • My view “I believe that the main principles of career building should be a good choice of employer, affection for your work, communication skills and continuous professional development.”
  • Story After graduating in 2010 he began his career at Phosphorit as an Electrical Equipment Service Electrician. He recently participated in the reconstruction of the Wet-Process Phosphoric Acid Workshop, leading to his current role.
  • NAME Kristoff Havelaerts
  • ROLE Controller, finance, accounting & economic department
  • WHERE I WORK EuroChem Antwerpen
  • My view “Next to the challenging job and excellent career prospects, I chose to work for EuroChem because of its company culture, which encourages collaboration, empowerment, pragmatism, openness and respect.”
  • Story Kristoff graduated in Business Engineering from the University of Antwerp. He then decided to broaden his experience through an Advanced Masters in Human Resource Management at Antwerp Management School.
  • NAME Migle Shantaraite
  • ROLE Technician, environmental protection division
  • WHERE I WORK Lifosa
  • My view “Lifosa has a very active youth movement that constantly invents and implements social, intellectual, sports and environmental projects. It is fun to work at EuroChem.”
  • Story Migle graduated from Alexandras Stulginskis University, Kaunas, specialising in Environment Protection. She is a member of the Council of Young Specialists and is an active participant in the environmental activities organised at the plant.