Distribution

In 2009 the Russian grain crop was 97 MMT, the second-highest level in 16 years.*

In 2009 we provided farmers in Russia and the CIS with agronomics consulting, third-party seeds and crop protection products, and sold 1.64 MMT of our fertilizers through owned and independent distributors in Russia and CIS, 25% more than in 2008.

The key to growth: we aim to more than double our sales volumes through our distribution network in 2010-2014.

*Source: RF GosKomStat.

Key facts

  • We expect long-term growth in Russian and CIS agricultural markets after underinvestment in the sector during the previous two decades, during which fertilizer application fell 90%
  • We sell yield, not fertilizers through our network, providing agronomics advisory services and third-party seeds and crop protection products in addition to EuroChem’s own fertilizers
  • Our distributors buy products from our plants and other producers, and sell at a margin to customers
Where we operate
  • Owned
  • Owned by independent distributors
Where we operate
Wheat is Russia’s Number 1 crop: in 2009 Russia produced 61.7 MMT of wheat, up 7.9% year-on-year.

Strategy

  • “Sell yield, not fertilizers” – we take an advisory approach to farmers, helping them to increase yields through a range of methods, rather than just boost their fertilizer consumption
  • Contribute to the recovery of efficient and effective agriculture in Russia and the CIS, and benefit from the agricultural recovery in this region
  • Better balance sales with a strong foothold in our home market, which helps to mitigate the effects of trade barriers if and when they arise

Achievements in 2009

  • Increased sales volumes in Russia by 20% and in CIS by 42%
  • Opened six new outlets

SWOT analysis

Strengths
  • Good coverage of most important agricultural areas of Russia and Ukraine
  • Agrochemical expertise and sale of high-quality seeds and crop protection items
  • Brand associated with quality and reliability; good brand recognition
  • High storage capacity
Weaknesses
  • Lack of presence in certain important agricultural areas (mostly in Ukraine)
Opportunities
  • Improve coverage of Southern and Central Russia and Ukraine
  • Launch sales of new products that only EuroChem produces in Russia, e.g. granulated urea
  • Establish presence in Belarus and Kazakhstan
Threats
  • Further price regulation in Russia leading to margin erosion for the domestic sales
  • Intensified competition from the other players such as PhosAgro, UralChem, Acron
  • Currency and credit risks in Ukraine; credit risks in Russia

Revenue for 2009*

RUR 5,390m

Revenue for 2009*

RUR 22.4m

* From own distribution centres only.

39 owned and independent distribution centres in 24 Russian and Ukrainian cities