Uralkali (“the Company”, MICEX: URKA), one of the world’s largest potash producers, today announced its unaudited IFRS key figures for the three months ended 31 March 2016.

Q1 2016 TOP LINE AND OPERATIONAL HIGHLIGHTS:

• Revenue down 28% y-o-y to US$ 521 million
• Net revenue¹ down 28% y-o-y to US$ 441 million
• Production down 4% y-o-y to 2.6 million tonnes of potassium chloride (KCl)
• Sales volumes down 8% y-o-y to 2.3 million tonnes of KCl
• Average FCA export price down 23% y-o-y to US$ 196 per tonne of KCl

Q1 2016 CORPORATE HIGHLIGHTS:

• In March, Uralkali’s completed an open market buyback programme, which began on 24 November 2015. The total amount of the programme was limited to 6.5% of the Company’s share capital. Upon completion of the programme, 4.89% of the Company’s share capital had been purchased. As of the beginning of April 2016, Uralkali’s free float (including shares represented by GDRs) constituted 8.96% of the Company’s share capital.
• In March 2016, Uralkali signed an agreement with PJSC Sberbank to open a credit line for a period of up to ten years in the amount of US$ 3.9 billion for the purpose of refinancing earlier credits received from the bank as well as other general corporate purposes. Together with any related agreements, this credit line is secured by pledge of Uralkali shares and GDRs constituting 20.0% of the Company’s share capital to PJSC Sberbank, and by 1 August 2016 up to 8.6% of additional Company’s shares should be pledged to PJSC Sberbank

SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD:

• In April, Uralkali signed a US$ 1.2 billion 5-year pre-export facility with 16 international banks
• In May, the Company’s Board of Directors approved another open market buyback programme. The shares and GDRs to be acquired under the programme will not exceed 4% of the Company’s share capital. The programme will run between 19 May and 19 September 2016
• In June, Uralkali’s Annual General Meeting decided not to pay dividends for 2015

The key Q1 2016 figures were as follows:

Business and Financial Review

In the first quarter of 2016, market conditions in the potash industry remained challenging. Purchase volumes decreased significantly in almost all key markets due to the absence of long-term contracts with India and China.

Additional negative factors were substantial carry-over stocks held by importers, unfavourable economic conditions, as well as the devaluation of national currencies. The high level of competition seen in 2015 persisted in the first quarter of this year, which resulted in a sharp drop in potash prices, particularly in premium markets. As a result, the average export price in Q1 2016 fell 23% compared to the same period in 2015.

Altogether, this had a negative impact on Uralkali’s key financial indicators, and the Company’s revenue and net revenue both declined by almost a third year-on-year.

Uralkali continues to implement its capacity development programme and carry out comprehensive monitoring of conditions at the Berezniki-1 and Solikamsk-2 mines. All operations are proceeding as usual and are on schedule.

Market Review and Outlook²

The lack of direction in the absence of supply contracts with China and India for 2016, high carry-over potash inventories, intense competition, temporary suspension of potash import by India government, sparked cautiousness among customers who took a wait-and-see approach, delaying purchases. The combination of these factors resulted in lower y-o-y potash prices and weak potash demand in 1H 2016.

In China, customers largely worked through existing potash inventories in Q1 2016. Potash stocks are estimated to have dropped to 4.0 million tonnes by end May 2016. The firming demand from the Chinese NPK sector during spring season was a supportive factor. Given record deliveries in 2015 which created elevated stocks, we anticipate potash deliveries will be in the range of 13.5 — 14.0 million tonnes in 2016 compared to 16.7 million tonnes in 2015.

In India, shipments from the 2015/2016 contracts continued to arrive at the ports. The market saw significant decline in import volumes in the first five months of this year due to high carry-over stocks and temporary suspension of potash import by Indian government in Q1 2016. Expected good monsoon season, recent stabilisation of Indian rupee against US dollar are likely to lead to better potash consumption this year compared to the previous year. Owing to high potash carryover stocks, 2016 potash imports may be below 2015 level of estimated 3.9 million tonnes.

Purchasing activity in Southeast Asia was slow as demand has been impacted by adverse weather conditions, and delayed China contract. High palm oil prices and strengthening of local currencies against US dollar are supportive for potash demand. Given weak potash demand in 1H 2016, we expect potash import volumes are expected to decline slightly this year compared to the previous year.

Delays in fertiliser application during the spring season due to unfavourable weather conditions in Western Europe and just-in-time buying pattern due to absence of China contract resulted in depressed European demand in 1H 2016. However, this demand has most likely just been postponed, and stronger buying activity is expected in 2H 2016. EMEA&FSU demand is expected to rise by 2-3% y-o-y in 2016 on the back of improved demand in Eastern Europe and Russia. In Western & Central Europe, 2016 demand may slightly ease compared to 2015 level.

Latin America used the first quarter to draw down inventories built in 2015. There are clear signs of stabilisation in Brazilian potash demand which is supported by higher crop prices and more stable Brazilian real relative to US dollar. In 2016, we expect a moderate increase in demand driven by favourable crop economics and improved credit availability in Brazil.

In North America, potash demand was healthy during spring season. We anticipate demand recovery this year. Increase in planted acreage and lower nutrient levels after extremely weak 2015 are supportive factors for potash demand in 2016.

We currently expect global potash demand to be down to 58-60 million tonnes this year from 61 million tonnes in 2015, reflecting industry destocking, delayed China contract and adverse weather conditions in some regions. The upside to potash demand in 2016 depends on the timing of China and India contracts, and macroeconomic issues in some markets.

Uralkali (www.uralkali.com) is one of the world’s largest potash producers and exporters. The Company’s assets consist of 5 mines and 7 ore-treatment mills situated in the towns of Berezniki and Solikamsk (Perm Territory, Russia). Uralkali employs ca.11,000 people (in the main production unit). Uralkali’s shares are traded on the Moscow Exchange.

¹Net revenue represents revenue net of freight, railway tariffs and transshipment costs

²Sources: Uralkali’s estimates, the IFA data, customs statistics, financial statements of potash producers.