Fertiglobe + Aramco post lower earnings in 1Q as OCI reconsiders listing venue

Fertiglobe posts lower earnings as hot fertilizer market cools: MENA fertilizers firm Fertiglobe — a JV between Adnoc and the Sawiris-owned OCI — saw its net income dip 62% y-o-y to USD 135 mn in 1Q 2023, according to its earnings release (pdf). Revenues were down 41% y-o-y to post USD 694 mn. The drop came as global fertilizer and energy markets cooled from peaks seen in the wake of the outbreak of war in Ukraine, as well as on the back of “muted industrial demand.” Fertiglobe plans to pay out a USD 250 mn dividend at the end of 1H 2023.

Egypt’s first green hydrogen plant is officially producing: Fertiglobe said “on-spec green ammonia” was produced during 1Q from its new 100-MW green hydrogen plant in Ain Sokhna in partnership with Scatec and Orascom Construction, which began commissioning in November. “We expect volumes to ramp up over the year,” it said, adding that a final investment decision on the plant should be made during 2023.

OCI is reconsidering its listing venue: Netherlands-listed chemical company OCI could look to list in the US or the Middle East as it looks to calm shareholder nerves about its share performance. The board has “approved a strategic review of all business lines, including an evaluation of OCI’s list in the Netherlands,” it said in its earnings release yesterday. The company has seen its share price decline more than 30% so far this year, prompting one investor to call for the company to sell off assets.

EMs face further challenges after latest Fed rate hike: Emerging markets are inching closer to the “danger zone” after the Fed hiked rates by another 25 bps last week pushing the policy rate to its highest level since 2007.

Default on the horizon? Some USD 210 bn of emerging-market hard-currency bonds are trading with yields significantly higher than that of other similar treasuries, according to Bloomberg. That means that around 15% of the USD 1.4 tn of outstanding sovereign external bonds are trading in distressed territory, indicating a rising risk of default.

AT HOME- The cost to insure Egypt’s debt hit a record 1.7k bps on Monday and has almost doubled this year as the country continues to struggle with exchange rate fluctuations and soaring inflation that has caused it to significantly increase its social spending.

Saudi Aramco’s net income dipped 19% y-o-y to USD 31.9 bn in 1Q 2023 on the back of lower crude oil prices, according to its interim financials (pdf). The Saudi oil giant’s net income still beat analysts’ forecasts of USD 30.8 bn. Revenues were down 11% to USD 111.3 bn.

Aramco to pay out an even bigger dividend: The company will issue a “performance-linked dividend” on top of its base dividend, it said shortly before releasing its 1Q financials. The additional payout to investors could add up to more than USD 20 bn this year, per Bloomberg Intelligence calculations cited by the business news outlet. Aramco’s USD 75.8 bn dividend last year was already the biggest of any listed firm, Bloomberg notes. Aramco shares closed up 3.2% on the news after rising as much as 7.2% during trading.

Context: The increased dividend comes as Saudi Arabia — which owns 90% of Aramco — posted a fiscal deficit in 1Q of USD 770 mn as spending rose and oil revenues fell.

THE CLOSING BELL-

The EGX30 fell 1.8% at yesterday’s close on turnover of EGP 2.9 bn (59% above the trailing 90-day average). Foreign investors were net sellers. The index is up 18.7% YTD.

In the green: Taaleem (+6.2%), Ibn Sina Pharma (+3.2%) and Mopco (+1.6%).

In the red: Abu Qir Fertilizers (-4.7%), Credit Agricole (-3.8%) and Qalaa Holding (-3.6%).

Yesterday’s sell-off in Western markets is continuing in Asia this morning, where exchanges across the region are nursing losses. The picture elsewhere is a little less clear, with US markets poised to open in the green but European bourses on course for a mixed open.