Sector Study: Fertilizers
Decreased consumption by 8.7% over the 2016/17 period
The domestic sector of fertilizer manufacturing is examined in a recent study of Infobank Hellastat S.A. According to Alexis Nikolaidis, Economic Research & Sectorial Studies Senior Analyst, manufacturers have been supplied with increasingly lower quantities of fertilizers over the last years – and agricultural supplies in general – since, after the outburst of the economic recession, their disposable income has been reduced by a combination of factors, such as tax burdens, high cost of production (periods of rising fuel and fertilizer prices), cuts in VAT returns, increases in electricity price tariffs for farming purposes, etc. At the same time, a stronger decline in demand was noticed after the imposition of capital controls in summer 2015.
According to the Hellenic Fertilizer Association (S.P.E.L.), during the growing season of July 2016 – June 2017, the domestic consumption of fertilizers dropped further by 8.7% compared to the previous year, to 667,368 tons. This level is the lowest recorded during the last 25 years, which indicates that crops are underfertilized to a great extent.
The decline is also detected in the fertilizing units of the basic nutrients, i.e. nitrogen, phosphorus, and potassium. In detail, during the 2016/17 session, nitrogen units fell significantly by a percentage rate of 18%, at 148,898 tons. Moreover, phosphorus dropped by 4.2%, at 49,990 tons, whereas potassium fell by 8%, to the level of 42,223 tons.
Over the last 7 years, consumption has shown a cumulative decline, in the region of 24%, which is a remarkable figure, taking into account the stability that characterizes the area of cultivated lands, whereas over a 25-year period, the decline has exceeded 65%. The trend of systematic underfertilization presents a risk to the quantity and quality of the production output, since the nutritional needs of the plants are not covered, with downgrading soil productivity of the agricultural regions of the country being the result.According to Mr. Nicolas Gouzelos, Chairman & CEO of Infobank Hellastat, “The sector of fertilizers shows that there is room for considerable growth, which is linked to the high potential of the country’s farming sector, approaching 40m stremmas (4m hectares) of arable land. According to market players, this area can fuel the consumption of fertilizers amounting to 1.5m tons per annum. However, an essential condition for the sector to return to an upward trend is the provision of financial backing to farmers, in order for them to be able to boost their liquidity and meet the high cost of production and their loan obligations.”
Financial analysisIn the study of ΙΒ.HS, the financial statements of 31 advertising companies are analyzed. The key conclusions can be summarized as follows: In 2016, Turnover recorded an increase of 14.4%, at €311.15m.
- In 2016, Turnover subsided further by 4.6%, to €372.43m.
- Total EBITDA fell by 20%, at 23.5m, while EBT dropped by a rate of 28.4%, to €12.9m.
- The EBITDA margin decreased to 6.2%, while the EBT margin increased to 2.6%.
- Capital leverage remained slightly higher than 1.7 over 1.
- Receivables were collected within a period of 5 months, whereas Inventories were held over a period of 3.5 months.