UPDATE 1-Russia's Uralkali H1 net profit falls less than expected

Thu Aug 28, 2014 9:07am EDT

Related Topics

* Uralkali sees 2014 global demand at 56-58 mln T

* Says no major difficulties due to sanctions (Adds details, quotes, context)

MOSCOW Aug 28 (Reuters) - Russia's Uralkali, the world's largest potash producer, said on Thursday its first-half net profit fell 7 percent year-on-year due to lower prices for the crop nutrient.

Uralkali quit a powerful trading alliance with Belarus in July last year to focus on maximising sales volumes, triggering a slump in global potash prices.

"In the first half of 2014, the potash market demonstrated signs of recovery both in terms of volumes and price," Dmitry Osipov, Uralkali chief executive, said in a statement. "Customers sought to replenish depleted stocks."

Uralkali said its first-half net profit fell to $370 million, beating analysts' average estimate of $330 million. Revenue rose 7 percent to $1.7 billion.

Global potash demand in 2014 may exceed the 2011 level, which would set a new record, Uralkali added.

In its presentation of results, it said that global demand was expected at 56-58 million tonnes in 2014 compared with 54 million tonnes in 2013. In 2015 it expects the demand to rise further - to 58-60 million tonnes.

During the first half of 2014, Uralkali signed a five-year unsecured club facility for $450 million with international banks, a rare event for Russia, which has been hit with sanctions by the West following its annexation of the Crimea region and its support of pro-Russia rebels in Ukraine.

"The political and economic turmoil witnessed in the region, including the developments in Ukraine, have had, and may continue to have, a negative impact on the Russian economy, including weakening of the Russian Rouble and making it harder to raise international finance," Uralkali said.

Uralkali is not currently experiencing any significant difficulties because of the sanctions, but economic instability, the threat of further sanctions and uncertainty in financial markets may affect suppliers and customers, it added.

The European Union and United States have imposed sanctions on some Russian individuals, companies and banks, but Uralkali has escaped unscathed.

Its net debt was $3.9 billion at the end of June, with earnings before interest, tax, depreciation and amortisation (EBITDA) at $767 million.

Shares in Uralkali were down 2 percent in afternoon trade, in line with a decline in other Russian stocks, on fears of escalating tensions in Ukraine. (Reporting by Polina Devitt and Natalia Shurmina; Editing by Katya Golubkova and Mark Potter)

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