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Johannesburg - Integrated fertilizer company Foskor said it may consider retrenchments from its 2 000-strong staff during the 2010 financial year, which it expects to be characterised by lower prices for fertilizer products.
The "global recession and financial crisis would have an impact on the bottom line in 2010", said Foskor CEO Alfred Pitse. He added that the "great returns" in the 2009 financial year, reported on Tuesday, "were unlikely to be repeated in the near term".
Foskor's earnings before interest and tax (Ebit) at R2.7bn represented a 149% year-on-year increase. Revenue vaulted 163% to R10.2bn. Pitse attributed the performance to strong commodity prices throughout the financial year.
An increase in biofuel demand, record harvests in 2008 and 2009, worldwide food shortages and an ever-growing human population were the main drivers behind improved revenue.
The Industrial Development Corporation (IDC), a Foskor shareholder, said the company would list on the JSE but could not say when owing to unfavourable market conditions. "It will probably list in the second half of 2010, with an estimated market cap of between R6bn and R7bn," said David Lerche, an analyst at Avior Research.
Foskor recently completed a black economic empowerment deal, which basically handed 26% control as a virtual free-carry, to the Manyoro Consortium.
Prices for phosphoric acid peaked in August 2008 at about $2 200 per tonne, but are presently at about $420 to $490/tonne.
Said Lerche: "Because phosphoric acid prices would have declined 50% to 60% on average in the coming year, Foskor's revenue will be approximately R5bn and Ebit at R1.1bn."
Commenting on the market environment, Foskor chief financial officer Theuns Koekemoer said: "Although Foskor's revenues and profitability were enhanced by higher commodity prices, the costs of raw materials such as sulphur and ammonia also increased exponentially."
Foskor, which styles itself as the only producer of fertilizer from phosphates in South Africa, said it was considering adding new products to its product suite.
According to the company, the higher grade rock it mines was wasted on fertilizer alone as it could also be used in products such as toothpaste and cleaners.
- Fin24.com
