...Volatile Earnings: Fitch Ratings assesses the fertilisers sector as having a higher-than- average level of earnings volatility and business risk relative to the corporate universe, as a result of volatility in end-user demand, stockpiling and to a small extent input costs. However, earnings are steadier than for chemical companies (see EMEA Chemicals Peer Study, August 2015) due to the long-term demand for fertilisers as a result of a growing population, increased meat consumption, and growing biofuel production. Ratings range from 'B' for single-site operations, to `BBB' for large diversified operations. Position on Global Cost Curve: Business profiles depend on the cost position of the producer. Fitch-rated fertiliser producers typically benefit from access to a cheap feedstock and therefore can withstand low points in the cycle. This can include access to cheap gas which benefits Middle Eastern, North American and CIS nitrogen fertiliser producers. Or it can be as a result of incumbent...
