Fertiglobe: revenue up 19.3% but profit down 90.3% as margin collapsed from 31.0% to 2.5%

Fertiglobe reported third-quarter 2026 results. Revenue reached USD 904.5 mn, up 19.3% year on year, operating profit was USD 111.8 mn, and net profit fell to just USD 22.7 mn from USD 234.8 mn a year earlier, a 90.3% decline. The net margin compressed from 31.0% to 2.5%, while leverage remains low: net debt of USD 305.8 mn, or 0.23x LTM EBITDA. Our conclusion: rather unattractive – an EV/EBITDA of 4.5x with no own-history benchmark offers no margin of safety, and the profit collapse and weak free cash flow outweigh the low debt. Our view: the share is rather unattractive at the current price.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue rose 19.3% year on year but growth decelerated from 91.9% in the second quarter

— Operating profit fell to USD 111.8 mn and the operating margin compressed to 12.4%

— Net profit collapsed 90.3% to USD 22.7 mn at a 2.5% margin

— Operating cash flow of USD 378.9 mn looks strong, but free cash flow is distorted by negative capex

— Net debt fell to USD 305.8 mn, or 0.23x LTM EBITDA

— Valuation: EV/EBITDA 4.5x and P/E 20.2x are not backed by own-history multiples

Key figures, USD bn

Revenue rose 19.3% year on year but growth decelerated from 91.9% in the second quarter

Revenue for the third quarter of 2026 was USD 904.5 mn, up 19.3% from the same quarter last year. Growth remains in double digits but is markedly slower than in the second quarter, when revenue rose 91.9% year on year. The deceleration followed an exceptionally strong second quarter, when revenue reached USD 1,085.9 mn.

The sequential decline from the second quarter is mainly explained by a pullback from the peak volumes and prices of the previous period. In absolute terms, quarterly revenue fell by USD 181.4 mn from the prior quarter, although it remains higher year on year. This suggests that the growth drivers of the first half – likely high nitrogen fertiliser prices – began to weaken.

Operating profit fell to USD 111.8 mn and the operating margin compressed to 12.4%

Operating profit in the third quarter of 2026 was USD 111.8 mn, corresponding to an operating margin of 12.4% of revenue. A year earlier, operating profit was USD 206.2 mn on revenue of USD 758.3 mn, a margin of 27.2%. The more than halving of the margin is the key negative surprise of the report.

With revenue up 19.3%, operating profit nearly halved. This means that cost of goods sold or operating expenses grew faster than revenue. In the absence of a cost breakdown in the provided facts, one can only state that revenue growth did not translate into profit and that operating leverage worked in reverse.

Net profit collapsed 90.3% to USD 22.7 mn at a 2.5% margin

Net profit for the third quarter of 2026 was USD 22.7 mn versus USD 234.8 mn a year earlier, a decline of 90.3%. The net margin compressed to 2.5% from 31.0% in the third quarter of 2025. Such a sharp fall in profit despite revenue growth points to disproportionate growth in expenses below the operating line or to one-off factors in the comparison base.

Last year's third-quarter profit of USD 234.8 mn was disproportionately high relative to operating profit of USD 206.2 mn, implying a significant positive effect below the operating line – possibly foreign-exchange gains or income from associates. In the current quarter, net profit of USD 22.7 mn against operating profit of USD 111.8 mn means a net outflow of about USD 89 mn below the operating line, likely interest expense and other items.

Operating cash flow of USD 378.9 mn looks strong, but free cash flow is distorted by negative capex

Operating cash flow in the third quarter of 2026 was USD 378.9 mn, well above net profit of USD 22.7 mn. This gap is explained by non-cash items and working-capital changes. However, capital expenditure is reported as a negative figure – minus USD 62.5 mn – which is unusual: negative capex implies either a refund or a reversal of previously incurred costs, and it cannot serve as a sustainable source of free cash flow.

Adding operating cash flow of USD 378.9 mn and negative capex of minus USD 62.5 mn gives a formal free cash flow of USD 441.4 mn. But this figure is misleading, since negative capex is a one-off or accounting phenomenon. Without it, free cash flow would be closer to USD 316 mn, still above net profit but not reflective of the company's true ability to generate cash after investment.

Net debt fell to USD 305.8 mn, or 0.23x LTM EBITDA

Net debt as of 30 September 2026 was USD 305.8 mn. Compared with 30 June 2026, it fell from USD 621.2 mn to USD 305.8 mn, a decrease of USD 315.4 mn over the quarter. Over twelve months, net debt declined from USD 984.3 mn on 30 September 2025 to USD 305.8 mn, a reduction of USD 678.5 mn. The ratio of net debt to LTM EBITDA is 0.23x, a low level.

The debt reduction is supported by operating cash flow of USD 378.9 mn for the quarter, which comfortably covered capital expenditure and likely debt repayments. The low leverage of 0.23x EBITDA gives the company financial flexibility but does not offset weak profitability. Interest expense is likely modest given the small debt, yet the fall in net profit below the operating line indicates that even with low debt, financial costs and other items are material.

Valuation: EV/EBITDA 4.5x and P/E 20.2x are not backed by own-history multiples

As of the reporting date, Fertiglobe's market capitalisation is USD 4,923.2 mn. The LTM EV/EBITDA multiple is 4.5x and P/E is 20.2x. Return on equity (ROE) is 4.3%, reflecting weak profitability despite low debt. The facts do not include a three-year history of multiples, so comparing current levels with the company's own past is not possible.

An EV/EBITDA of 4.5x looks low for a chemicals producer, but it is calculated on LTM EBITDA of USD 1,313.9 mn, which includes the strong first quarters of 2026. If profitability remains at the third-quarter level, LTM EBITDA will decline and the multiple will rise. A P/E of 20.2x with falling profit looks expensive: the market is paying for earnings that could contract further.

Valuation on the latest reported figures

Bottom line

The report's strong point remains low leverage: net debt of USD 305.8 mn, or 0.23x LTM EBITDA, and operating cash flow of USD 378.9 mn. However, net profit collapsed 90.3% to USD 22.7 mn, the margin compressed to 2.5%, and revenue growth decelerated from 91.9% to 19.3%. Negative capex distorts free cash flow, and the EV/EBITDA of 4.5x and P/E of 20.2x have no historical benchmark for comparison. Our conclusion: rather unattractive – an EV/EBITDA of 4.5x with no history offers no margin of safety, and the profit collapse outweighs the low debt. Our view: the share is rather unattractive at the current price.