Morocco’s Cherifien Phosphates Office (OCP) has reported a decline in its financial figures compared to the same period in the previous year, with total revenues reaching MAD 37.6 billion.
This decrease can be attributed to the lowering of sales prices for rocks, fertilizers, and acids.Reduced prices are in contrast to exceptional levels that were observed during the first half of 2022.
It’s worth noting that the increase in sales volumes for phosphate fertilizers could not fully offset this decline in prices. OCP’s gross margin for the same reporting period amounted to MAD 18.5 billion, according to a recent note.
This reduction in gross margin compared to the previous year can be attributed to the impact of raw material reserves that were accumulated at higher costs during the period of price increase.
Additionally, the accumulation of stocks in 2022 also played a role in this decline, as explained in the note.
However, despite these challenges, OCP remains well-positioned for the future. The company’s disciplined approach, operational efficiency, commercial agility, and cost efficiency provide a strong foundation to benefit from the anticipated recovery in demand during the second half of the year, which is expected to result in robust financial results in 2023.
OCP’s note also highlighted the significant progress made in its investment programs aimed at increasing production capacity and advancing initiatives related to environmental, social, and governance (ESG) projects.
Notable achievements include advancements in the water management program, such as the construction of a water pipeline at Jorf Lasfar and the commissioning of two new desalination plants.
Furthermore, OCP demonstrated its commitment to corporate social responsibility by making a generous donation of one billion dirhams to the special fund dedicated to addressing the impact of the recent tragic Al Haouz earthquake.
This contribution underscores the company’s support and solidarity with the national relief efforts.
The Group also obtained two favorable rulings from the United States Court of International Trade on September 14 and 19 in the context of the appeal filed challenging the 19.97% countervailing duties imposed by the Department of Commerce (DOC) on imports of Phosphate Fertilizers from Morocco to the United States as well as the affirmative determination of damages caused by the International Trade Center (ITC).
OCP is glad to continue working closely with the DOC and the ITC in order to examine said countervailing duties in light of the Court’s ruling, as it has won its case on several of the issues it raised.
The Group accomplished significant program milestones in the first half of 2023, advancing in developing the water pipeline at Jorf Lasfar and successfully commissioning two additional desalination units.
With the completion of the first of three new phosphoric fertilizer production lines in May 2023, OCP achieved a significant victory.
Each of these new lines will contribute an extra million tonnes of phosphate capacity once they are fully operational, significantly bolstering the Group’s position in the market.
In summary, OCP’s note highlighted several key points, including the significant drop in prices due to changing market conditions and the impact of deferred purchases from certain customers on the company’s financial performance.
Despite these challenges, OCP’s solid foundation and optimistic outlook for the second half of the year are expected to support improved performance, driven by growing demand and improving prices, particularly in the third quarter.