Government subsidies bring soaring profits to fertiliser producers

The government programme aimed to subsidise the acquisition of fertilisers by the small farmers is beginning to show results. Crops have not reached record-highs, though. The effects are seen in the financial reports filed by the fertiliser producers.

Azomures Tårgu-Mures and Amonil Slobozia, two of Romania’s leading fertiliser plants and the main suppliers included in the $82m government programme, have logged soaring financial results for the first half of the year.

Azomures saw its net profit triple in the first six months of 2003, from $4.48 million in 2002 to $13.88 million. Amonil’s net profit has posted a similar growth pace, from $740,000 in the first half of last year to $2.3 million in 2003.

Moreover, sales of the two companies have also increased. Amonil logged 50% higher sales in dollars, whereas the increase was 25% in the case of Azomures.

“These positive financial results are due both to the government’s subsidy programme for the small farmers and to the exports’ boom. We have received big orders from the United States for a new type of chemical fertiliser that we started making this year, after significant investments made last year,” Yetkin Erman, the vice-president of Azomures Board told Ziarul Financiar.

Azomures was the main player in the programme, as it secured fertilisers for 20 counties and supplied more than 40% of the 333,896 tonnes of fertilisers.

The Tårgu-Mures based company released the results last Friday, on the Stock Exchange, with investors reacting promptly to the triple-profit news. The company’s shares went up 15%, the maximum growth allowed for one trading day, up to 2,750 ROL/share.

Beside Azomures, the programme also comprised Amonil Slobozia, Turnu, Sofert Bacau and Doljchim Craiova.

“The government programme was, indeed, the main drive behind the profit and turnover growth,” says Victor Dobrescu, general manager at Amonil.

Although it only uses azote, since the programme stipulated the fertilisers also had to incorporate phosphates, Amonil imported phosphates worth 700,000-800,000 dollars and patented a technology allowing it to mix its regular fertilisers with the phosphates, so as to benefit from the programme.

Sofert Bacau, also listed on the Bucharest Stock Exchange, did not release financial results, but investors are nevertheless expecting significant growth.

The profit logged by Azomures amounts to 1,220 ROL/share, with 70 ROL/share for Amonil. The market price of Amonil shares is only 136 ROL. laurentiu.ispir@zf.ro