DPM - Weak H1 2023 results due to low urea price, high input cost - Earnings Flash
  • 2023-07-31T00:00:00
  • Company Research

- DPM announced weak Q2 2023 results, including reported NPAT-MI of VND101bn (USD4.3mn; -92.5% YoY). The significant decline in NPAT-MI was due to the average selling price (ASP) of urea declining by 54.2% YoY, which outweighed urea sales volume rising by 36.2% YoY in Q2 2023 (per our estimates). Nevertheless, Q2 2023 NPAT-MI decreased by 61.2% QoQ due to a 24.8% QoQ lower urea ASP (per our estimates) and 33.9% QoQ higher SG&A expenses despite 29.9% QoQ higher urea sales volume (per our estimates). 

- We estimate DPM’s urea ASP in H1 2023 was USD356/tonne, which is much lower compared than what was shared at the company’s May AGM. In H1 2023, the average Middle East urea price was USD341/tonne (-57.3% YoY). We believe global urea prices bottomed in Q2 2023 and will remain relatively flat in H2 2023.

- H1 2023 results include revenue of VND6,972bn (USD295mn; -35.7% YoY) and NPAT-MI of VND361bn (USD15.3mn; -89.4% YoY). We attribute the lower NPAT-MI in H1 2023 to the average urea ASP declining by 49.6% YoY and input gas price rising by 5.5% YoY, which outweighed strong urea sales volume (+22.5% YoY), per our estimates.

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