Moody's Investors Service has assigned a Baa3 long-term issuer rating to Abu Dhabi-listed Fertiglobe with a “stable outlook”, while Fitch Ratings has allocated the world’s largest seaborne exporter of urea and ammonia a first-time long-term Issuer Default Rating (IDR) of BBB with a stable outlook.
The investment grade Baa3 rating reflects the “company’s high profitability and cash generation capability” against its exposure to a cyclical end-market and its significant share of capacity in Egypt and Algeria that exposed the company to various geopolitical risks, Moody's said.
A cyclical industry is sensitive to the business cycle, with revenue higher in periods of economic prosperity and expansion, and lower during economic contraction.
Fitch Ratings’ investment grade rating reflects Fertiglobe's “strong cash flow generation from young assets that are strategically located to serve global ammonia and urea markets and its competitive gas cost”, the American credit rating agency said in a statement on Monday.
Fertiglobe, a joint venture between Abu Dhabi National Oil Company and Netherlands-listed OCI, raised about $795 million from its initial public offering on the Abu Dhabi Securities Exchange last year, amid strong demand from international, regional and local investors.
OCI is the majority shareholder with a 50 per cent controlling stake, while Adnoc owns a 36 per cent share. The company had a market capitalisation of Dh40.5 billion ($11bn) as of June 27.
Its output capacity comprises 6.7 million tonnes of urea and ammonia, produced at four units in the UAE, Egypt and Algeria, making it the largest producer of nitrogen fertilisers in the Middle East and North Africa.
Despite the importance of Fertiglobe's plants to the economies of Egypt and Algeria, Moody's said operating in these countries involves “a high level of economic, political and operational risk”.
The company's track record of operating in these environments indicated “some ability to effectively manage the exposure”, it added.
Moody's also expects that Fertiglobe will swiftly adapt its capital allocation if required.
The company benefited from “competitively priced fixed price gas contracts which in some cases contain cost escalation clauses if ammonia / urea prices increase above certain thresholds”, it said.
“These gas price contracts position the company in the first quartile of the global urea and ammonia cost curves … furthermore, the company benefits from strategically located production capacity east and west of the Suez Canal.”
In the first quarter of 2022, Fertiglobe's net profit surged more than three-fold to about $467m, driven by increased selling prices across the company's product line. Revenue more than doubled to $1.2bn.
It employs more than 2,600 people and the company is incorporated in The Abu Dhabi Global Market.
Fertiglobe's liquidity profile is excellent, Moody’s said. As of March, the company had about $1.26bn of cash on its balance sheet and access to a $300m undrawn revolving credit facility.
Its earnings before interest, taxes, depreciation, and amortisation (EBITDA), and cash generated from Abu Dhabi alone, could service the company’s debt and support credit metrics in line with an investment grade rating, Moody's said.
Fitch Ratings expects Fertiglobe to generate record EBITDA of more than $2bn this year, up from $1.5bn last year, supported by all-time high ammonia and urea prices.
“This is explained by high global crop and gas prices, exacerbated by the war in Ukraine due to the important role of Russia, Ukraine and the Black Sea, notably for the global trade of ammonia,” it said.
“As supply gradually improves and gas prices ease, we expect ammonia and urea prices to return to mid-cycle levels by 2024, translating into an EBITDA for Fertiglobe of about $0.8bn.”
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Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
If you go
The Flights
Emirates and Etihad fly direct to Johannesburg from Dubai and Abu Dhabi respectively. Economy return tickets cost from Dh2,650, including taxes.
The trip
Worldwide Motorhoming Holidays (worldwidemotorhomingholidays.co.uk) operates fly-drive motorhome holidays in eight destinations, including South Africa. Its 14-day Kruger and the Battlefields itinerary starts from Dh17,500, including campgrounds, excursions, unit hire and flights. Bobo Campers has a range of RVs for hire, including the 4-berth Discoverer 4 from Dh600 per day.
Museum of the Future in numbers
- 78 metres is the height of the museum
- 30,000 square metres is its total area
- 17,000 square metres is the length of the stainless steel facade
- 14 kilometres is the length of LED lights used on the facade
- 1,024 individual pieces make up the exterior
- 7 floors in all, with one for administrative offices
- 2,400 diagonally intersecting steel members frame the torus shape
- 100 species of trees and plants dot the gardens
- Dh145 is the price of a ticket
Auron Mein Kahan Dum Tha
Starring: Ajay Devgn, Tabu, Shantanu Maheshwari, Jimmy Shergill, Saiee Manjrekar
Director: Neeraj Pandey
Rating: 2.5/5
Europe’s rearming plan
- Suspend strict budget rules to allow member countries to step up defence spending
- Create new "instrument" providing €150 billion of loans to member countries for defence investment
- Use the existing EU budget to direct more funds towards defence-related investment
- Engage the bloc's European Investment Bank to drop limits on lending to defence firms
- Create a savings and investments union to help companies access capital
The biog
Simon Nadim has completed 7,000 dives.
The hardest dive in the UAE is the German U-boat 110m down off the Fujairah coast.
As a child, he loved the documentaries of Jacques Cousteau
He also led a team that discovered the long-lost portion of the Ines oil tanker.
If you are interested in diving, he runs the XR Hub Dive Centre in Fujairah
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
Biography
Favourite Meal: Chicken Caesar salad
Hobbies: Travelling, going to the gym
Inspiration: Father, who was a captain in the UAE army
Favourite read: Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter
Favourite film: The Founder, about the establishment of McDonald's
Dark Souls: Remastered
Developer: From Software (remaster by QLOC)
Publisher: Namco Bandai
Price: Dh199
The Pope's itinerary
Sunday, February 3, 2019 - Rome to Abu Dhabi
1pm: departure by plane from Rome / Fiumicino to Abu Dhabi
10pm: arrival at Abu Dhabi Presidential Airport
Monday, February 4
12pm: welcome ceremony at the main entrance of the Presidential Palace
12.20pm: visit Abu Dhabi Crown Prince at Presidential Palace
5pm: private meeting with Muslim Council of Elders at Sheikh Zayed Grand Mosque
6.10pm: Inter-religious in the Founder's Memorial
Tuesday, February 5 - Abu Dhabi to Rome
9.15am: private visit to undisclosed cathedral
10.30am: public mass at Zayed Sports City – with a homily by Pope Francis
12.40pm: farewell at Abu Dhabi Presidential Airport
1pm: departure by plane to Rome
5pm: arrival at the Rome / Ciampino International Airport
BULKWHIZ PROFILE
Date started: February 2017
Founders: Amira Rashad (CEO), Yusuf Saber (CTO), Mahmoud Sayedahmed (adviser), Reda Bouraoui (adviser)
Based: Dubai, UAE
Sector: E-commerce
Size: 50 employees
Funding: approximately $6m
Investors: Beco Capital, Enabling Future and Wain in the UAE; China's MSA Capital; 500 Startups; Faith Capital and Savour Ventures in Kuwait
The specs
Engine: 4.0-litre flat-six
Torque: 450Nm at 6,100rpm
Transmission: 7-speed PDK auto or 6-speed manual
Fuel economy, combined: 13.8L/100km
On sale: Available to order now
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