Management report
Distribution
Revenue (including sales to other segments)
RUB bn
Distribution segment
Distribution revenue continued to grow in 2010, although it still represents a relatively modest 9% of our overall sales. Sales increased 58% year on year from RUB 5.4bn in 2009 to RUB 8.5bn in 2010 (2008: RUB 5.3bn). EBITDA in 2010 was RUB 489.9m, up nearly 22-fold from RUB 22.4m a year earlier (2008: RUB 54.8m). The strong 2010 performance was driven by stronger volumes on nearly all fertilizers sold combined with higher prices. Segment fertilizer volumes continued to rise, increasing 53% to 903 kt in 2010 vs. 587 kt for 2009 (2008: 356 kt) of sales through the outlets owned by EuroChem. Fertilizer sales in Russia and the CIS through both owned and independent distributors increased by over 27% to 2.09 mt of product in 2010 from 1.64 mt of product in 2009.
EuroChem’s distribution network includes 25 distribution centers in key agricultural districts of Russia and Ukraine. The strategy of these centers is to sell yield, not fertilizers: they buy products from our plants and other producers, and sell at a margin to customers, while simultaneously providing advisory services to help farmers produce more by using a full range of seeds, fertilizers and crop protection products.
| RUB bn, or as indicated | 2010 | 2009 | Change 2009-2010 |
2008 | Change 2008-2009 |
|---|---|---|---|---|---|
| Revenue (including sales to other segments) |
8.54 | 5.39 | 58% | 5.28 | 2% |
| Cost of sales | (7.64) | (4.97) | 54% | (4.72) | 5% |
| Gross profit | 0.90 | 0.43 | 109% | 0.56 | (24%) |
| Other expenses | (0.44) | (0.43) | 216% | (0.53) | (18%) |
| EBIT | (0.46) | (0.01) | NA | 0.03 | (123%) |
| EBITDA | 0.49 | 0.02 | NA | 0.06 | (59%) |
| Gross profit margin | 11% | 8% | 3pp | 11% | (3pp) |
| EBIT margin | (5%) | 0% | (5pp) | 1% | (1pp) |
| EBITDA margin | 6% | 0% | 6pp | 1% | (1pp) |
| Capex | 0.18 | 0.02 | 800% | 0.05 | (53%) |
| Net working capital | 0.44 | 0.29 | 52% | 0.55 | (47%) |
| Fixed assets | 0.41 | 0.20 | 105% | 0.22 | (10%) |
| Total capital employed | 0.85 | 0.49 | 73% | 0.77 | (36%) |
| ROCE | (54%) | (1%) | (53pp) | 4% | (5pp) |
| Staff | 165 | 187 | (12%) | 162 | 15% |
Sales (MMT) (top 5) |
|||||
| Ammonium nitrate | 0.442 | 0.306 | 44% | 0.112 | 175% |
| NP and NPK | 0.246 | 0.140 | 76% | 0.180 | (22%) |
| MAP | 0.084 | 0.092 | (9%) | 0.047 | 97% |
| UAN | 0.044 | 0.017 | 159% | 0.006 | 179% |
| Urea | 0.042 | 0.018 | 133% | 0.011 | 65% |