Fertiglobe plc (GSM) Q3 FY2025 Earnings Call Transcript & Summary

Hello, everyone, and thank you for joining Fertiglobe's Q3 2025 Earnings Call. My name is Claire and I will be coordinating your call today. [Operator Instructions] I will now hand over to Rita Guindy, Director of Investor Relations and Communications to begin. Please go ahead.

Thank you. Good morning and good afternoon, ladies and gentlemen. Thank you for joining FertiGlobe's Q3 and 9 Months 2025 Results Conference Call. With me today are Ahmed El-Hoshy, Fertiglobe's Chief Executive Officer; Haroon Rahmathulla, Chief Commercial and Growth Officer; and Andrew Tait, Chief Financial Officer. On this call, we will review Fertiglobe's key operational events and financial highlights for the quarter as well as a discussion of the outlook for nitrogen market, followed by Q&A session at the end of the call. The presentation we will discuss today can be found on our Investor Relations website and webcast participants can download it by clicking on the link at the top of the screen. As always, please be reminded that any forward-looking statements made on this call may involve risks and that the actual results could differ materially from those statements. With this, I will hand it over to Ahmed El-Hoshy, CEO of Fertiglobe.

Thank you, Rita, and welcome, everyone, to today's call. I'd like to begin, as always, by commenting on our safety performance, which remains our highest priority. We're pleased by the continued improvement in our reporting culture and safety statistics, supporting our ambition of achieving a 0 injury workplace. Our 12-month rolling recordable incident rate of 0.02 incidents per 200,000 work hours as of September 2025 is a strong result and compares very favorably with industry benchmarks. Nevertheless, we remain committed to further strengthening both operational and process safety with the goal of maintaining the highest HSE standards to ensure safe, sustainable and reliable operations across our entire platform for all employees as well as contracting. Moving on to our financial results. Fertiglobe today reported a robust set of results for Q3 2025 with revenues of $758 million, up 53% on a year-over-year basis and 34% above Q2 2025 levels. Adjusted EBITDA was $286 million, up 69% year-over-year and 62% on a quarter-over-quarter basis. This strong performance was driven by our continued progress on the strategic initiatives announced at our Capital Markets Day in May of this year, including the manufacturing improvement plan as well as higher quartile price capture across the sales book and increased urea prices. Adjusted net profit attributable to shareholders for the quarter was $134 million, significantly higher than the $28 million reported in Q3 2024 and the $12 million reported in Q2 2025. Meanwhile, reported net profit attributable to shareholders reached $235 million compared to a net loss of $10 million in Q3 2024 and a positive $20 million in Q2 2025. As explained in our results release this morning, the company's reported net profit reflects one-off gains related to the recognition of goodwill in Egypt allowing for additional tax deductibility, and I'll leave Andrew to elaborate further on this shortly. During the first 9 months of 2025, our revenues were $2 billion, 31% higher than 9 months 2024, while adjusted EBITDA was $723 million, up 48% year-over-year, and adjusted net profit attributable to shareholders came in at $218 million, reflecting 66% growth compared to the prior year. Reported net profit was $328 million for the period compared to only $120 million in the 9 months 2024. It is worth noting that these strong results were delivered despite gas supply challenges in Egypt and hence, there are a clear testament to our team's ability to capture upside in dynamic markets through commercial agility and cost discipline, underscoring the resilience of our integrated platform. They have also definitely been supported by progress made on strategic initiatives like the manufacturing improvement plan. As an example, the power outages in Algeria last year cost us $31 million in the 2024 period, but the commissioning of our own in-house boiler has enabled us to run close to island mode and capture that value this year. I'd now like to briefly discuss the program we delivered on our key strategic initiatives. As announced in the ADNOC, Majlis held at early October of this year, we are progressing well in our recently announced Grow 2030 Strategy to become an integrated global nitrogen champion generating $1 billion of EBITDA by 2030 at 2024 prices. At the time, we shared that we were already -- we'd already actioned initiatives to drive 25% of our announced growth targets. We are pleased to say that including the steps implemented on our manufacturing improvement plan, we have now action steps aimed to contribute around $140 million of incremental EBITDA by 2030 or approximately 38% of our growth target in less than 6 months. These initiatives have been actioned with full financial impact to be realized in 2030. Let me break this down a bit for clarity, as you can see on Page 8 of the presentation. $49 million reflects the already implemented actions supporting the execution of our manufacturing improvement plan, representing 43% completion on the stated target to increase EBITDA by $110 million to $120 million by 2028. Examples include the stabilization efforts at Sorfert in Algeria including modifications for internal power generation as well as the installation of a hydrogen recovery unit at Fertil in Abu Dhabi, which increases ammonia production by 6% while reducing CO2 emissions which has an IRR north of 25%. These are clear examples of how we aim to unlock the potential of the youngest asset base in the sector through increasing production and energy efficiency gains. Another $46 million related to cost reduction programs representing 84% progress on the announced $55 million reduction target to reach by 2027. This includes the $19 million in permanent fixed cost savings with support of ADNOC that we realized since the beginning of September 2025. There's another $23 million in expected EBITDA contribution by 2030 from the recently acquired distribution assets of Wengfu Australia. This entity is now independently funded having settled its parent funding to Fertiglobe within less than 2 months of closing just under 45 days. The last $22 million represents the expected contribution of upgraded products like Diesel Exhaust Fluid and Automotive Grade Urea for which we have already scaled production capacity in the UAE and Egypt with the investments completed and attractive returns anticipated. Our robust performance for the quarter as a result of the continued action and progress on our strategic initiatives, our ability to capture the higher quartile pricing through commercial excellence program and as we said, stronger urea prices. At the ADNOC Majlis, we also announced an artificial intelligence target to unlock at least $25 million of incremental EBITDA by 2030 per year via asset optimization, anomaly detection and preventative maintenance, reflecting a $20 million increase compared to previously announced targets with the potential for further value creation as we firm up other opportunities further. Additionally, the construction of our Project Harvest or 1 million tons per annum low-carbon ammonia project is 60% underway and on track for completion by 2027. On Egypt Green, which benefits from our renewable ammonia offtake to the German government, we are pleased to have received attractive EPC bids recently as we continue to work towards FID in the coming months, but continue to focus on regulatory clarity and support to get us there. We're still evaluating Project Baytown in Texas, alongside our majority -- the majority shareholder -- our majority shareholder ADNOC and Exxon supporting the global advancement of low-carbon ammonia and production in line with our commitment to disciplined low-carbon ammonia growth. And moving on to shareholder returns, in line with our disciplined capital allocation policy backed by our strong free cash flow conversion, robust balance sheet and commitment to creating shareholder value, Fertiglobe has guided for H2 2025 dividends of at least $100 million to be paid out in Q2 2026, including the $62 million worth of shares bought back in 2025 and the H1 2025 dividends of $125 million, this brings total capital return to shareholders to at least up $287 million as of today, offering a highly competitive yield of at least 5% for 2025. This also brings total returns paid and committed to date to $2.8 billion, equivalent to around 50% of the company's market capitalization at IPO. With this, I'd like to hand it over to Haroon to discuss our commercial performance and the outlook for nitrogen and ammonia markets in more detail.

Thanks, Ahmed. Let me start by discussing the highlights of our commercial performance in the third quarter of 2025. Despite gas supply challenges in Egypt during the quarter, Fertiglobe's own produced sales volumes totaled 1.3 million tons. To take advantage of tight urea markets we made a strategic commercial decision to maximize urea production to capitalize on the margin differential versus ammonia, reflecting our focus on always capturing the highest netbacks. This led to record urea production at our facilities in Egypt. Our urea own-produced sales volumes were 5% higher year-over-year to reach 1.1 million tons. Meanwhile, ammonia own-produced sales volumes declined about 75 kt from 227 kt in Q3 2025 compared to 305 kt in Q3 2024. Due to gas supply issues in Egypt and the strategic decision to increase urea production. Our third-party traded volumes for Q3 2025 increased to 316 kt well above Q3 2024 levels of 18 kt and were profitable during the quarter. During the 9-month 2025 period, our own-produced sales volumes were down only marginally by 1% year-over-year to 4.1 million tons, driven by 1% lower urea own produced sales volumes of 3.21 million tons during that 9-month 2025 period compared to 3.26 million tons in the corresponding period last year. On the ammonia own-produced sales volumes, the numbers were 1% lower to 904 kt in the 9-month '25 period compared to 918 kt in the same period last year. Our third-party traded volumes increased year-over-year to 680 kt compared to 235 kt in the same period last year, also showing a significant increase. Total own-produced and traded third-party volumes of 4.8 million tons were up 9% year-over-year compared to the 4.4 million tons in the 9-month 2024 period, showcasing as Ahmed mentioned, our manufacturing improvement efforts and our commercial agility despite some external challenges. Now moving on to nitrogen market developments and the outlook for our products. Urea prices remained healthy in Q3 2025. Averaging $474 per ton FOB Egypt, which is 16% and 33% above Q2 2025 and Q3 2024 levels, respectively. Prices started the quarter on a strong note driven by supply shortages in Iran and Egypt and remained at elevated levels across the quarter. This was supported by strong Indian tender demand with four successive tenders between July and October 2025. Robust Kharif season purchasing saw record domestic urea sales of 5.4 million tons in July 2025. In the January to October '25 period, domestic sales increased by approximately 1.6 million tons compared to the same period last year, supported by strong monsoon rains, a lower stock position and weaker domestic production. Most recently, IPL in India has issued another import tender for 2.5 million tons. Prior tenders this year has been in the 1.5 million to 2 million tons of urea per tender, indicating an above-average request and further demonstrating India's needs for urea imports. In China, exports returned to the market in a controlled manner from June onwards with a gradually released export quota of 4.2 million tons. A recently announced fourth quarter allocation to see China briefly returning to the market over the coming weeks. However, Chinese exports are unlikely to erode positive sentiment from the Indian tender with India's strong commitment to buying thereby tightening markets in the East. Chinese exports are expected to remain below the historical 10-year average of 6 million tons this year, with China soon turning its focus to restocking for its upcoming application season. Elsewhere in the East, Iran is also likely to see gas diverted to winter heating across the current quarter, resulting in a period of lower utilization rates and exports similar to prior years. In Europe, the market has seen buying activity ahead of the carbon border adjustment mechanism regulations coming into force on 1/1 2026. This has resulted in a price rally with prices reaching $507 per ton FOB Egypt last week. New tariffs on Russian and Belarusian fertilizers and agriculture products into the EU were also enforced in July 2025. The tariffs now impose an additional EUR 40 per ton on imports of nitrogen-based products, including urea. The rates will increase yearly from 2026, reaching EUR 315 per ton by July 2028 and are applied on top of the EU's existing import tariffs, which are set at 6.5%. Long term, demand growth, excluding China of 12.5 million tons is expected to materially outstrip additional capacity growth of 9.7 million tons by 2029, implying a deficit of around 3 million tons against prior periods of surplus. Meanwhile, ammonia markets in the West of Suez have tightened significantly in Q3 and early Q4, following supply shortages at major export hubs. Ammonia prices have increased from lows of $435 per ton CFR Northwest Europe in May to $670 per ton currently, reflecting production shortfalls and gas issues in the West. The continued theme of market tightness alongside elevated natural gas prices during the winter months, is expected to support higher ammonia prices in the West in the coming weeks. On the supply side, we have noted continued delays to the start-up of new gray ammonia production capacity in the U.S. Gulf Coast. Moving forward into 2026, a combination of CBAM, and the phaseout of free allowances under the EU ETS scheme will spur demand for low-carbon ammonia into Europe. Low-carbon ammonia is a key enabler of the decarbonization of the fertilizers, chemicals, marine and power generation sectors with solid long-term growth potential. With that, I would like to hand it over to Andrew to discuss the financial results in more detail.

Thank you, Haroon. So let me start with some highlights our performance in Q3 and the 9 months up to this date. The Q3 2025 revenues were $758 million. That's up 53% year-on-year and 34% quarter-on-quarter. That's mainly driven by the higher urea prices and our overall sales volumes. Our adjusted EBITDA is up 69% year-on-year and 62% quarter-on-quarter to $286 million in Q3 '25. As leading to an adjusted EBITDA margin of 37.7%, well above our Q3 2024 and Q2 '25 levels with 34.1% and 33.2%, respectively. Adjusting for third-party sales, our adjusted EBITDA margins would be even higher at 48.3% compared to 37.1% in Q3 '24 and 37.7% last quarter. Our Q3 '25 adjusted net profit attributable to shareholders was $134 million. That's up 370% compared to an adjusted net profit to shareholders in Q3 '24 of $28 million and $12 million in the previous quarter. On a reported basis, our attributable net profit was $235 million in Q3 '25, reflecting one-off gains related to the goodwill resolution in Egypt that Ahmed mentioned, compared to a net loss attributable to shareholders of $10 million in Q3 '24, which is reflecting retroactive provisioning for potential gas price revisions in Algeria. So let me give some more context and background to that goodwill settlement. On August 25, Fertiglobe reached a favorable resolution with the Egyptian tax authorities, allowing the tax deductibility of $720 million goodwill generated in the past under the Egyptian Fertilizer Company, EFC. Prior to that, 0 goodwill was assumed for income tax provision purposes. And whilst the discussions with authorities are ongoing, we've been provisioning $267 million of taxes over the last 5 years due to this uncertain position. But following the Q3 recognition of this $720 million goodwill as tax deductible, we've now paid $119 million for these previous deferred tax payments in a one-off settlement, which is reflected in the lower free cash flow during this quarter. As a result of this favorable settlement, the company also reversed its uncertain tax provision, recognizing a $111 million gain, increasing our reported profit numbers. It's also important to note that this goodwill will act as a tax shield going forward and hence, the recognition of a $31 million deferred tax asset, taking the combined positive impact on our P&L this quarter to $142 million, of which $35 million is captured in our adjusted profit. For the 9 months to the end of Q3, our revenues were $2.019 billion. That's 31% above the same period last year, mainly driven again by the higher urea prices and the overall sales volumes. Meanwhile, our 9 months '25 EBITDA increased 48% year-on-year to $728 million, leading to adjusted margins of 35.8% compared to 31.7% in the 9 months of '24. Adjusting for third-party sales, our adjusted margin would be 44%, well above the 36.1% of the previous year's 9 months. Our adjusted net profit attributable to shareholders was $218 million. That's up $66 million compared to the $132 million in the previous year same period. And our reported net profit was $328 million, significantly above the 9-month 2024 levels of $120 million, driven primarily by the one-off adjustments just discussed. At the same time, you can see from our results, our financing expenses have started to come down, reaching $90 million in 9 months 2025 versus the $103 million in the same period last year as a result of ADNOC's direct and indirect support to Fertiglobe to access lower-cost financing. Turning to the balance sheet and cash flow performance. As of the end of September '25, Fertiglobe reported a net debt position of $984 million, down from $1.05 billion as of the end of December '24, implying a net debt to LTM adjusted EBITDA of 1.1x and showcasing our capital discipline and balanced approach towards value-led growth whilst providing competitive shareholder returns. Our free cash flow before growth CapEx amounted to a negative $38 million in Q3 2025 compared to a negative $61 million in Q3 '24, reflecting performance for the quarter, but particularly that onetime tax settlement payment of $119 million I mentioned earlier related to prior periods and dividends to noncontrolling interests withholding tax and working capital outflows and net interest paid. In the 9 months 2025, our free cash flow before growth CapEx amounted to $269 million compared to $165 million in the 9 months to 2024. Our total cash capital expenditures, including growth CapEx were $46 million in Q3 '25 compared $50 million last -- in the similar quarter last year, of which $34 million was related to maintenance capital expenditures compared to $37 million in the same period last year. Our total cash capital expenditures, including growth CapEx were $111 million for the 9 months 2025 compared to $94 million last year for the same period, of which $83 million was related to maintenance CapEx expenditures compared to $72 million in the same period last year. I'll now hand it back to Ahmed for our outlook and concluding remarks.

Thanks, Andrew the recent market strength supported by our strong order book and the India tenders, spring purchases and buying ahead of the CBAM implementation points towards a positive outlook for Q4 2025, on which we have relatively good visibility now, given we're almost halfway through the quarter. To conclude, we're proud of the progress we've made on our Growth 2030 Strategy in a very short time frame, enabling us to clearly showcase the unique capabilities of our team and our platform. We're well positioned to continue capturing any strength in nitrogen markets and continue delivering on our strategy even amid sometimes challenging operating environment. I'd like to thank our team for getting us here and look forward to reporting even more progress over the coming quarters as we remain firmly committed to our Growth 2030 Strategy to become a $1 billion-plus EBITDA global nitrogen Champion by 2030 at 2024 prices as well as on continuing to deliver excellent value to our shareholders. We can now open the line for questions.

[Operator Instructions] Our first question comes from Jonathan Chung from Morgan Stanley.

Firstly, on the EBITDA for third quarter. If I remember correctly, in the Investor Day, you mentioned $250 million of EBITDA but you delivered a $280 million for the quarter. So could you give us some highlight on what's changed in the last month or so to explain that delta? And then secondly, on Project Baytown. I noticed you removed the FID project or expected time line from the MD&A. Could you give us an update on when do you expect the FID to come through? Or would it sort of follow the same fate as Project Rabdan and being rephased?

Sure. I think what you're referring to with regards to the first question is our guidance where we guided in the investor measures in early October, at least $250 million of adjusted EBITDA for the quarter, and we confirmed this morning $286 million of adjusted EBITDA for the quarter. So I think that's a little over 10% above what we had guided to. Am I answering your question correctly?

Yes. I was just wondering -- I'm just wondering what's changed in the last month or so to deliver that delta versus your October guidance?

Yes. So our October guidance was just right after the quarter end, and we're just finalizing kind of inventories and balances. And so we came in a good 10% above that guidance while we're firming up all those figures. And I feel pretty good about that because despite that beat on our guidance, we actually ended with a bit higher inventory levels in Q3, which bodes well for Q4 in terms of more sellable volumes. Could you repeat the second question again, please?

Yes. The second question is around the project Baytown. I noticed you removed the FID time line from the MD&A report. Just wondering, can you give us an update on the time line for the FID? Or would it also follow the same fate as Project Rabdan and being rephased?

So that's not the intention. Basically, we're in discussions with our partners. There are a few things that needs to follow, phase to get to FID with our partners, ExxonMobil, and obviously, ADNOC as our parent is working through the progress. We hope to give more updates in the coming months, but it could slip into the first half of next year in terms of the FID but continue to work through and looking at obviously, regulatory for offtake, everything to meet our necessary economic requirement.

[Operator Instructions] We have a question from Ram Kamath from Barclays.

I have a couple, please. Clearly, you progressed well on your MIP program. So -- but could you just talk about current utilization rate at the group level? I'm just trying to understand and get a sense of where you are now versus the target that you have in mind, which is mid-90s by end of this decade? And on the demand side of things, while demand is now expected to be strong in the 4Q, driven by India tender and healthy purchases that you mentioned ahead of CBAM implementation, is falling affordability is a concern for you? And I wonder if you have any comment, how do you see this impacting demand in 2026.

Yes, sure. So with regards to the first question on the utilization rate, we haven't published that for the quarter, but I'm happy to say that despite some of the gas curtailment issues we saw in Q2 and Q3, we actually, I think versus last year, we're up 5% on ammonia and kind of, I think, about 18% on urea in terms of produced volumes. So we're definitely on the right trajectory, and that's because we've been able to avoid some of the outages caused by external factors when it comes to power in Algeria or water in Egypt. And the capacity efficiency rates have continued to improve. So I mean, I think we're well on that plan. It's going to be not linear. We're going to our targets for 2028. But so far, we've been happy and we were able to take some of the downtime this summer to actually do some necessary maintenance in Egypt to improve operations as well. With regards to your second question on affordability, that continues to be an area of focus of ours, but we're very pleased by the amount of demand we've seen in certain markets, including India, Ethiopia, Australia. When we think about affordability also very important to importing markets like the United States that are under bought, we've seen a big rally on both corn and wheat pricing in the last few months, which has just further improved affordability and we continue to anticipate strong spring demand for next year and more buying [indiscernible]. So that should -- we're seeing a high -- the good pricing here in Q4, but I think that should bode well to have an overall strong demand picture in the beginning of the next year, and we'll look to capitalize on that.

Thank you. We currently have no further questions. So I would now like to hand over to Rita for any webcast questions.

Thank you. So we got a few questions on the webcast. And as a reminder, you can still add your questions in the chat. The first question is the $142 million goodwill tax settlement in Egypt significantly boosted reported earnings. Could you elaborate on the recurring cash tax benefit expected in future years from this ruling?

Yes, sure. I'll take that. So essentially, if you look at the goodwill that's actually over 10 years, which is $72 million a year. And when you assume the 22.5%, which is EFC, you get down to $16 million, which is the recurring element there. Now the second one. So we settled this goodwill in a onetime tax rate for the previous year, and we've previously conservatively assume $0 of goodwill. Now recognizing the $720 million means we needed to unwind $111 million worth of taxes. So in terms of the effect on the tax rate, these are two parts. So the tax rate in each jurisdiction stays the same. The taxable income in EFC, which has 22.5% tax rate has now gone down meaning our cash taxes are less overall. And we like this because essentially, if you're looking at the amortization, the SG&A, it's a noncash item. We're now close to $350 million a year against our run rate maintenance CapEx, which we revised in the CMD, which will be a run rate about $100 million, $120 million. So that's meaning a lower cash tax versus EBITDA and therefore a better cash conversion going forward.

Thanks, Andrew. Another question on the market. Urea and ammonia prices strengthened in Q3. What pricing outlook are you expecting for the fourth quarter and early 2026 particularly with CBAM implementation on the horizon?

Yes. So as stated in the prepared remarks, I mean, fourth quarter is off to a good start. I think our average price in Egypt was in kind of the $470s per benchmark in Q3 and today we're at $507 a ton. Part of that is kind of that pre-buying ahead of the CBAM implementation in January of next year kind of like we saw some prebuying before tariffs kicked in, in U.S. in Q2 of this year. But that's seen a lot of good demand into Europe. And what that means is that some of the other markets have gotten a bit less tons. So we're looking at key import markets that are really focused. India needs another 2.5 million tons in this last tender they announced last week. Ethiopia continues to look to secure more tons over the next several months for their buying period. And then Brazil, we'll be purchasing through December and Australia through the beginning of next year. And as I said earlier, the U.S. is relatively underbought. So generally, from a demand perspective, things seems quite firm, which is helpful, which is supportive for kind of our near to medium-term outlook. On the ammonia side, we saw actually numbers of around $450 a ton back in Q2. And today, we're sitting at Northwest Europe price of $670 a ton, the highest level we've seen in over 2 years. The main driver here is -- yes, there's been continued demand but the major over here has been one of supply, where we've seen feedstock uncertainty caused some outages in Trinidad with constrained production. We've seen some outages in the Arabian Gulf as well as in the U.S. Gulf Coast and continuing demand, particularly also when you think about what the margins are for phosphate producers where phosphate numbers are very high incentivizing them to buy more and more ammonia to produce more products. So it's a reduction of the supply availability that's caused this very tight market. And we're seeing this probably continue through year-end and the beginning of next year. But it's an area that we'll continue to monitor and see what the supply outlook looks like and potential start-ups of some new U.S. Gulf Coast projects and new capacity probably towards the beginning of the next year.

Thanks, Ahmed. Another question was, what's the reason behind the increase in the third party traded volumes this year versus last year? And on a related note, whether this was related to Wengfu and if it's sustainable going forward?

So I think it's a good question. I think it's not -- just to be clear, it's not related to Wengfu because Wengfu closed on October 1, and now we call that Fertiglobe Australia. So that was in the fourth quarter. So for third quarter numbers, we've seen an increase in traded products in both urea and ammonia. Part of the ammonia increase in traded products is that we were producing strategically less ammonia and producing more urea out of Egypt because of the significantly higher upgrading margins on urea. So we ended up covering some of our ammonia commitments with third-party products. That's one. And then from a urea perspective, overall, we are going to be looking to trade a bit more and you see more trades happening there. This is part of our Pillar 2 which is to have more activity getting closer to the end user and generating some incremental profit over those figures. So we always remind investors to look -- when you look at our margins, look at our margins, excluding third-party products to get a sense of how we're doing at the plant level, but we will see more and more products flowing through where we look for back-to-back opportunities, great risk-adjusted returns and having a bigger customer facing position at Fertiglobe not only with our own product, but also a third-party product, and that will be exacerbated by the addition of Wengfu with 1 million tons of throughput into Australia. We anticipate becoming more of a buyer into the Arab Gulf markets and the East Asian markets to support the agricultural sector in Eastern and in the future Western Australia as well.

The next question is, what is Fertiglobe's new gas tariff negotiated with Sonatrach?

I think we've given some guidance on that figure before with the provisions we had done in our Q3 results in November of 2024. So we continue to have the same provisions at that level, which was kind of in the $4 to $5 range depending on where product prices is at. And that's already reflected in our financial results since Q3 of 2024.

And then with regards to AGU, what's the update on Fertiglobe's AGU production? When do you expect output? And what are the plans for craving this and estimations for throughput capacity.

Yes, I'll take that. Thanks, Rita. So AGU is, again, part of our CMD initiatives to expand our existing product offering to products that are countercyclical to fertilizers and offer more stability. So we are happy to report progress in the period to date, we've shipped volumes, test volumes to customers that were positively received, and we anticipate shipping small volumes even before the end of 2025, we expect to ramp up those volumes over the course of 2026. And as mentioned previously, we've already announced some key partnerships with customers in Southern Europe as well as Eastern Europe that creates a home for this product at premiums that historically have been in that $40 to $50 range over urea. So progressing well in terms of AGU and on DEF, which is more an initiative out of the UAE. As we've said before in the past as well, we've made the investments required to meet the demand and what we're waiting on right now is basically legislation that would add more tick around the use of the DEF in the local market, and that's something that we anticipate happening shortly.

Thanks, Haroon. The next question relates to the EU carbon border adjustment mechanism which is set to take effect next year. How does Fertiglobe plan to adapt this operations and pricing strategies to remain competitive in the European market?

And I think we gave a little bit of an update on this in our investor presentation, which is posted online. There's no surprise here about this implementation in Jan 1 of next year. The age of our assets, the potential associated with the manufacturing improvement plan with our focus on efficiency, I think our supportive competitive advantages. So not only do we expect an advantage on gas price versus our peers sitting in Europe and elsewhere, but also on our CO2 charges given the age of our assets and also our manufacturing improvement plan, these are key competitive advantages we'd like to capitalize on. And we have already been submitting data to the EU over the last couple of years. So when we find ourselves in a position with transparency that puts us in a good place versus those that may not have all that transparency a third-party product that will default to the higher CO2 charge levels. So we think it will be a nice differentiator for us. It does mean that we continue to focus on CO2 production at our sites and what we can do to take advantage of a lower carbon ammonia product is also going to be important. In terms of how it's priced, what we tend to see is we're looking at what happens with duties. When we have, for example, urea and ammonia coming out of Egypt and Algeria, we pay no duties on that into Europe. Other exporters like those from the United States, definitely those from Russia and even from the GCC to pay those duties. So you have a duty paid price and a duty the unpaid price. So that the product coming from markets that are not Egypt or Algeria, end up pricing at a discount, usually, that's relatively equivalent to that duty. We anticipate something similar happening on the carbon border adjustment mechanism where the more dilutive product with the higher charge will come at a bigger discount than the lower carbon products. And that effectively -- it will be passed on to the ultimate downstream users with CBAM.

Thank you. And then a question with regards to Project Harvest, when is it expected to be completed? And have you secured any offtake deals yet?

Yes. In terms of Harvest look, happy to report that construction is well underway since Q3 2024, we're about 60-plus percent complete and things are going well in terms of the progress so far. We expect COD operations to commercial operation date in 2027. In terms of offtakes, Mitsui and GS have a 10% equity share in the business, and they will take -- they will offtake their commensurate tons similar to their offtake -- similar to their equity percentage, but Fertiglobe is quite confident of placing the remaining tons. As you know, we are a major producer as well as trader of ammonia, and we would look to take advantage a few things related to Harvest. One is, obviously, it's a low CapEx cost, which gives -- which puts it in an advantaged position vis-a-vis other ammonia back-end ammonia plant being built elsewhere in the world. And as we've also mentioned in our press release, we will also look to take advantage of some of the favorable CI attributes of the ammonia stream and look to see whether we could secure a premium for it. But overall, the project is going according to plan.

Also, I would just add that we're having very constructive discussions not only with typical ammonia customers, actually new consumers of ammonia that are looking to build downstream related consumption of ammonia. So very constructive discussions on multiple fronts, and that's very much in line with our Pillar 3 nitrogen products expansion to help incentivize the additional usage of our products as well as tangential synergies and opportunities there.

Okay. Another follow-up question on CBAM. How does the CO2 intensity of your North African assets compared to the average European fertilizer producers? I know you mentioned that slower, but can we quantify how much?

At this stage, we're not quantifying how much it is because it depends on which assets and it's very much with regards to the charge. It's going to be levied in 2027. That's going to be the interesting part of this. So it will depend on the performance in 2026. And in line with our manufacturing improvement journey, not only are we looking to increase asset utilization from 87% to that -- 93% to 95%, but significantly less start stops because better reliability is the best way to get better energy efficiency. Last year, with the 10 power outages we had in Algeria, our energy efficiency was shut basically in summer 2024, but that's not relevant for purposes of CBAM. When we look at our first run rate year being 2026 next year, we hope to report a significant advantage compared to typical European producers. Obviously, European production can really have a wide range. Some European producers have something in kind of that mid-30s MMBtus per ton and others are in the kind of the high 30 MMBtus per ton. And what we're going to do is leverage our assets that have an average life of 20 years with 80% of our assets built in the last 25 years versus European production assets, which I think almost all of them are over 50 years old.

Okay. I think all the other questions have been answered already through the course of the Q&A. So back to you, Ahmed to conclude.

We thank you all for joining us in this conference call. I look forward to speak in the new year on our Q4 results. Thank you.