Ladies and gentlemen, thank you for standing by, and welcome to the OCINV First Quarter 2020 Results Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. I must advise you that this conference is being recorded today.
And I would now like to hand the conference over to your speaker today, Hans Zayed, director, invest investor relations. Please go ahead, sir.
Yes. Thank you. Good afternoon and good morning for our audience in the U. S. Thank you for joining the GMP first quarter 2020 conference call.
With me today are Nasiv Saguers, our Chief Executive Officer, Hassan Badriale, our Group's Chief Financial Officer and Apnet Falvoshi, our Group Chief Operating Officer. On this call, we will review OCIT operational events and financial highlights for the quarter followed by a discussion of OCI's outlook. As usual, at the end of the call, we will host a question and answer session. As a reminder, statements made on today's call contain forward looking information. These statements are based on certain assumptions and involve certain risks and uncertainties And therefore, I
would like to refer you to
our disclaimers about forward looking statements. Now let me hand over to Ahmed.
Thank you, Hans, and thank you all for joining us today. Hope you're all healthy and staying safe. Naturally, we'll begin with safety as this is a very big, area of focus for us compounded by the current COVID 19 developments in the last few months. We're very glad to report that all our employees have remained safe despite the global challenges, and our goal is to keep them, their families, as well as those in their surrounding communities safe. To that end, we are pleased that our occupational safety performance was best in class during the quarter.
Our recordable incident rate was an excellent 0.13 for the 1st quarter, And the 12 month rolling, average was 0.23 incidents per 200,000 radars, which is, we believe, one of the lowest in our global industry and the figure we are continuing to work on bringing down. Our focused prioritized process safety globally and reduced occupational safety incidents ultimately to 0 at all our assets across the globe, which is, of course, a leading indicator on operational performance and reliability of the plants themselves. Looking at our business in more detail, OCI continues to operate, and our production supply chain and distribution have not been impacted by the COVID nineteen challenges. Our dedicated task force for COVID-nineteen closely monitors developments and coordinates efforts for every aspect of our business across the group. They conduct daily risk assessments, rolling out contingency plans with a 2 to 3 month look ahead to focus on continuity of operations as well as supply chain.
It is important to note that all OCI's products are deemed essential products by the respective governments and regulators in all our jurisdictions where we produce or sell to. This includes the entire supply chain production distribution logistics We will therefore do everything in our power to help our communities receive the product's opinions. Operationally, we've had a good quarter. We are pleased that our nitrogen portfolio continues to run a steady and high rates in Q1 2020 following extensive turnarounds last year. With a large number of plants running above nameplate, capacity post debottlenecking issue initiatives.
This is despite some unscheduled downtime at one line in for deal during Q1, which was which has been addressed, and all lines are running well again. On a like for like basis, excluding Brazil, given it only became part of our group in Q4 2019, our total gross ammonia production increased by 15% in the first quarter compared to the same quarter. A year ago. We achieved some very significant increases at Sorefares and IFCO during the quarter, in particular. All production lines at Sorefares Grande is consistently high levels since since the debottlenecking and into Q1, resulting in average utilization above 90% in the first quarter, an increase of more than 50% in production volumes q1119 to q12020.
Iowa Fertilizer company maintained its high rates, that the plan has been achieving since the turnaround last summer, And as a result, the upstream flats, are achieving record volumes. For example, ammonia utilization was an average 110% of nameplate capacity in Q1 and production was up 25% year over year. Our methanol portfolio operationally is behind the portfolio, but we've made substantial progress improving performance here as well. Last year, as you know, OCI Beaumont suffered a loss of production in total of 5 months due to largely a few key issues, which were comprehensively addressed in our recent turnaround. We mentioned in our last quarterly update call that the that we accelerated the turnaround, and completed it in the first half of January for ammonia and the second half February for methanol.
Both plants have performed consistently since then, and and I can confirm that Beaumont continues to run steadily close to its potential with an average of 113 percent of the pre de bottlenecking design capacity in April. We achieved higher volumes at Natgasoline in Q1 year over year, even though the plant utilization rate was impacted by several setbacks during the quarter. Repairs were conducted and the plant is now currently running again. Production volumes in the Netherlands at biochem will relatively steady as one of two lines was in an extended turnaround, but this was offset by the additional volumes from the recently refurbished second line, which has been ramping up. We expect to see the full benefits of both lines from the third quarter onwards.
Our sales volumes were also up strongly. Our total owned reduced sales volumes increased 62 percent to 2,700,000 metric tons during the first quarter of 2020 compared to the same quarter last year. This has to be looked at in the context of a very late start to the season in 2019 due to extreme weather compared to much better conditions this year. We also benefited from other factors. Firstly, of course, the addition of Fortil and Abu Dhabi to our consolidated results, but also the increased utilization rates and production gave a significant boost driven by the increased ammonia production.
And on a like for like basis, our nitrogen volumes would still have been up 40% year over year. Our diesel exhaust fluid business in Q1 in the U. S. Continued to grow healthily in the, versus last year. Methanol own produced volumes were at approximately the same levels as during the first quarter of 2019 as a result of major turnarounds and some maintenance work that I just mentioned.
With that, I'd like to hand it over to Hassan for the financial results.
Thank you, Ahmad. I'll begin by covering some of the highlights of our results that we posted this morning, focusing first on the P and L. We recorded an increase in consolidated revenues of 36 percent to $811,000,000 during the first quarter of 2020. Compared to the same quarter last year. This reflects what Ahma just described, a ramp up of production volumes, pose of turnarounds, that we had, in previous period, but it's partially offset by, 15 to 25% lower selling prices for our main products, again, year on year compared.
Our adjusted EBITDA was $193,000,000, which represents an increase of 49% compared to the first quarter of 2019. The main driver has been more than 60% increase in sales volumes. This year, as Ahmed again described earlier, weather patterns have been ideal for growing crops, crops and the season started and a healthy way in March. We also benefited from lower stock gas prices in Europe and the U. S.
This coupled with our focus on premium products underpinned our margin performance during the quarter. We further expect the full effect of the recent drop in gas prices, to be captured from the second quarter onwards in 2020. On a segment, on a segment level, the EBITDA of both our nitrogen and ethanol businesses improved despite the meaningfully lower selling prices. Compared to the first quarter last year. Looking at a bridge from Q1 last year to the first quarter of this year, It is notable that the impact of lower selling prices alone is circa $90,000,000.
Therefore, offset by the growth in volumes and the improved underlying gas gas pricing that you're able to achieve. The biggest increase in EBITDA was in the night energy segments. Driven primarily by the performance of our megabits export platform known as Vertiglobe. We had a boost from the inclusion of Fortil, our consolidated results, of course, but a significant improvement, at our Algeria or sulfate Algeria operations was also a big factor. To to remind you, to reemphasize, we performed the first of 2 comprehensive turnarounds in 2019 at our Algeria site during the first quarter of 2019, hence, the noticeable growth in volume.
Our European business was down slightly as we carried over higher cost inventory, and we did not capture the full effect of the lower gas prices yet. We are hopeful that the healthy start of the season will result and meaningful inventory reductions during the second quarter and subsequent periods. The methanol segments performed relatively well. If you take the lower selling prices the turnaround at Beaumont And Associates in extra costs into accounts. Given the contractual nature of our methanol business, we did incur some extra costs related to purchases of methanol that were produced from the market as a result of, downtime during the quarter.
To fulfill contractual volumes. Natgasoline performed better than in q1 2020's transition rates were well above the first quarter, of 2019. And despite the fact that we are still working towards improving capacity utilization, suggesting further upside to come later this year. Worth noting that our 50% share of a second insurance payment of $1,000,000 as compensation for business interruption losses and damages incurred in the past few months is also included and the net gasoline EBITDA for the first quarter. Turning to the balance sheet and cash flow.
Free cash flow before growth CapEx during the quarter was the net $85,000,000. This reflects mainly an increase in net working capital of a $125,000,000, which is a repeat feature during this time of the season or of this year. Mostly driven by higher trade receivables. These naturally translate into cash, as we get into the second quarter and some potentially spill over into the third quarter. Well.
Maintenance capital expenditures of $91,000,000 were also higher than average as a result of some payments related to 2019, that carried over in the year, but mostly due to the very comprehensive turnarounds at OCI Beaumont, which was described earlier. This this number should not be annualized as it is not representative, for the quarterly average, and we continue to expect a consolidated CapEx, of around $250,000,000 for the year, which is lower than previous, the guidance, by $3040,000,000. Our net debt decreased by $94,000,000 during the quarter to 3 97,000,000,000 as of the balance sheet dates of 31st March 2020. Despite these higher than average outflows, and, and no cash outstanding from nongasoline uni quarter. This was mostly due to the fact that we received the cash consideration of $167,000,000 from ADNOC in March, reflecting the closeout of net debt settlement based on closing adjustments for the Fertiglog, merger.
And we also had some, tailwinds in positive currency effects of around $33,000,000, reflecting mainly dollar movement and the continued devaluation of the Algerian De Nars. We believe our consolidated liquidity position of around $1,300,000,000 as at 31st March 2020, which includes headroom and committed facilities, continues to be quite healthy. And has been helped by our strategic and refinancing actions during the past 24 months. Importantly, as a result of our timely finance, refinancing actions in October 2019 and the previous year. We have no debt maturities at the parent company level until the next bond maturity in April 2023.
We also have very limited scheduled debt amortization of less than $200,000,000 on average per year across the group until the end of the year 2022. Finally, some of our, other larger costs with a focus on interest expense are also coming down this year. As we expect an interest expense reduction of between $30,000,000 to $40,000,000 in 2020 compared to the year 2019 as a result of our refinancing actions and decrease in base rates. We also continue to work on optimizing if you have some help with that, including particular debt so that we can simplify structures and target additional savings. We therefore believe we are well positioned to weather the current, conditions.
With that, I would like to hand over to Nasiv for further commentary. Nosiv,
Thank you, Hassan, and thank you all for joining the call today. Let me start by thanking all our OCI team members for their dedication and resilience and staying safe. I'm impressed that during these challenging times, we have been able to demonstrate levels of global cooperation We have not seen before and achieved best in class safety records. Despite all the challenges the world is facing, the outlook for the majority of our markets, is still looking good and OCI's asset base, commercial capabilities, and financial standing are well positioned to manage near term volatility. If I start with nitrogen markets.
I'm pleased to confirm that on the fertilizer side, we haven't seen any material impact from COVID nineteen during this ongoing application season. If anything, we had a very vigorous start to the season across all our end markets, and our order book for the second quarter is looking very healthy. In the US, spring planting is well ahead of last year with the latest USCA data at the beginning of May showing, corn planting at 50% complete compared to 21% last year. On the same date. It's well publicized that in March, the USDA came out with a bullish estimate of 97 million acres for this application season.
Market observers currently believe that this will pan out slightly lower, maybe up to 9 to 4000000 Acres, but we will know more in the coming weeks. This is still a very healthy increase of around 5% from last year. The direct application ammonia season in April has already been the strongest in many years, helped by very favorable weather. And the combination of an increase in acres and lagging urea imports into the US compared to us here is pointing to a very strong season for urea and Newan as well. As a result, the industry should be ending season with minimal carryover inventory of nitrogen fertilizer.
In Europe, we are seeing very strong demand for May June deliveries in our core Northern European nightlife markets. So we expect a healthy performance of our European operations in Q2 as well. And a lower inventory level starting into the softer summer months. Our export tax from Fertilio is sold out until mid June and we are benefiting from ongoing demand and major importing regions. And we have been selling significant volumes in 2000 Europe, East Africa, India and Australia to mention a few, including some new markets for us.
So all in all, we feel good about the current season and the current outlook. For our fertilizer business, albeit with some weakness on the industrial side of nitrogen project, be it a DEF or Miller mine. If I now look at our methanol business, methanol prices have come down as a result of COVID 19 and its effect on the sharply or lowering of oil prices. We have limited visibility on the land control and economic impact of COVID-nineteen crisis, but looking at forward oil prices, we believe the second half of the year, should start seeing some recovery and ethanol price. But I want to reiterate that a large proportion of our methanol production is already committed to end users that need the product or their downscaling production.
And that we are a bit insulated due to the our advantageous geographical locations close to our customers. There are also several factors that mitigate a drop in global demand. Most importantly, several producers have already shut down high cost production facilities, which will help support the balance in the market. And we expect more to come if the methanol prices stay lower for long. We, of course, on the very are on the very low end of the cost curve.
At current methanol and natural gas prices, our businesses has a strong competitive cost advantage and still generates healthy margins. This brings me to our outlook. Well, it's saying prices, have been low lower in, in both nitrogen and methanol, We remain fully focused on what is within our control, I. E. Operational and commercial excellence, controllable costs, and volume growth.
With regard to co operation accidents, we are fortunate that we have finalized our heavy scope turnarounds for the nitrogen business last year. And that we have brought forward and finalized our major methanol turnaround activities to the first quarter this year. Before the escalation of the COVID 19 pandemic. We have already seen the positive effects coming through in the first quarter performance of our nitrogen business, helped by the strong execution and efficiency on sales and distribution. In the last few months, we have also addressed certain areas our methanol operation and we expect methanol volumes to ramp up through 2010.
As a result, we expect higher and more efficient asset utilization rates across the platform in 2020, also achieving better conversion economics. We believe our cost structure is already one of the best and best but we continue to look for opportunities to optimize further. For example, we have identified an additional $20,000,000 of cash savings Sertidlobe to be realized over the next 3 years. Finally, with cost under control and our plans moving towards their full potential we don't we see no reason today why we should not see double digit volume growth this year. With that, we'll be open the line for, for questions.
We'll now begin the question and answer session. Please stand back while we compile the Q And A queue. This will only take a few moments. If you wish to cancel your request, please press the hash key. And the first question comes from the line of Tom Wickersworth from Citi.
Please go ahead.
Nazareth Hazan, Mohammed, thank you very much for your presentation and opportunities to ask questions. 3, if I may, Firstly, just on the the US season, you know, your if you could ask you to help paint the picture a little bit more. Obviously, you know, how much it's gonna be second half versus sorry, 3rd second quarter versus 1st quarter, I guess, is is what I'm asking. And could you help us understand what the mix shift to urea means versus UAN? Any any additional color there would be helpful.
The second question is on, European gas prices. I think you noted that you said that at current rates, there'd be a $100,000,000 benefit for the full year. And you just highlighted that there wasn't much benefit in, in the first quarter So what what kind of run rate was it in the 1st quarter? Noting we should be obviously at, 25,000,000 a quarter if we spend that evenly. And the third question is on CapEx.
Obviously, you've had some maintenance come through in first quarter. But what should we expect for full year CapEx?
Aflac, do you want to answer those questions?
So on the on the first question, Tom, with regards to the movements this year, we've seen a lot of it coming actually in Q2 versus Q1. We've had a record April, for ammonia movement in the Midwest. And then we expect to see and has started seeing because of the acceleration of crop planting, very strong urea and UAN demand as well. With regards to your second question around natural gas, as Hassan mentioned during the, earlier remarks, We've seen, natural gas prices come down precipitously in Europe, actually, TTF, which is what we buy off of trading below Henry Hub, into Q2. But as Hassan mentioned, in Q1, we had not gotten the physical benefit of that because of some of the that was sold in Q1 was at the higher gas prices of Q4.
So, leave that $100,000,000 number reflect, balance of the year benefits, mainly, when compared to the prior year. And also, as you recall, the the the gas prices in Q1 still were, favorable 2020 relative to 2019. Carmendi, your third question?
Yes, third question was on the CapEx for the full year.
So we've basically been reviewing CapEx naturally over the last several month, particularly with the COVID-nineteen phenomenon. And as stated, we're fortunate that a lot of the CapEx that we needed to do the urgent ones, whether it was the OCI Beaumont turnaround, which we accelerated or last year's for Ferris and IFCO. And of the OCI nitrogen lines, a lot of that is behind us now. So looking at our CapEx guidance, which we'd had in the prior call, which was in the high 200s around 280 $1,000,000. We found an ability to remove at least $30,000,000 of CapEx for the balance of this year via postponements, mainly, for non critical activities that could wait until, later time to be executed.
This is not this is without sacrificing safety or reliability and each of the, project managers or the plan managers that the plants have been working with, the central team to identify those projects, and reduce capital expenditures during this time, which is for 2 reasons. 1 is to obviously, execute execute projects during times of less activity, sorry, times of increased activity and less COVID-nineteen social distancing restrictions. And secondly, because we look to maximize free cash flow generation through the year.
Thank you very much. Very helpful.
Thank you. Next question comes from the line of Christian Faitzler. Please go ahead.
Yes. Good afternoon, gentlemen. Three questions if I may. First one, Can you remind us again, I'll set it to an hour schedule if you see over the next few months, if if any. Second, I guess, more or less, to the topic of your question, in Europe, if you have statements, you mentioned the track that below oil price might have on coal and demand.
Would you see any repercussions for fertilizer demand at this point in time, if the U. S. Farmer really goes about 90,000,000 acres? And then, 3rd question, how is COVID-nineteen impacting the F demand in the U. S?
Is it all assuming that the tracking activity continues. Thank you.
Maybe I can start with just on the turnaround question. We don't, I mean, for obvious competitive reasons, we don't highlight for the markets in the public what our turnaround schedule is for the balance of the year. They're not, you know, communicate that into the market. So we're not going to be able to comment on you know, information around future turnarounds, but we will be able to to to identify turnarounds as they occur, each quarter in the results. Regards to your 3rd question on DES demand, we have seen some softness in the, April, May timeframe, obviously, with, some reduction in the SMS, but we still have a good the base level of flow of DEF.
And I think you're correct to point out that the DEF in the U. S. Unlike Adlu and Europe, DEF in the U. S. Is largely focused on trucking where we've seen a lot less passenger vehicle movements.
That's more an effect on on gasoline consumption, not affecting as much the because it's a much more gasoline, not diesel driven market. So we've seen some softness, I mean, something kind of in the 10% to 20% range, but we with our customers, I believe that we're able to, we'll be able to recover that later this year. And also, it happened to happen during Q2, which has allowed us to flexibly change our production profile from diesel exhaust fluid to granular urea, for example, and sell at a higher at a higher price right now anyway because of the, the Guardian markets, in the Midwest holding study.
Okay. Great. Thank you.
So the core ethanol link, we've seen obviously ethanol demand in the very near term, with what's happening in the reduced gasoline demand come down. It's hard to say when that, you know, eventually, recovers in terms of just when transport demand picks back up, but, you know, some factors around us that are important, obviously, to keep in mind is, you know, government mandates towards the Ag sector, which has gotten significant financial aid, the the the corn plasters as well as on ethanol blending and the biofuels mandate in the United States. So naturally, if we see oil price, oil demand and kind of transportation demand go up, we we see that happening more naturally without external forces. Resulting in more ethanol demand and higher cost consumption. But even short of a very large recovery in that, we do anticipate some support to help mitigate the reduction in ethanol demand.
Thank you. Next question comes from the line of Lisa Benoit, Morgan Stanley. Please go ahead.
Good afternoon, everyone. A couple of questions from my side. Just following on on the previous analyst, so on the maintenance, I I really understand you cannot comment on maintenance CapEx and turn around for competitive reasons. But could you at least give us a little bit of high level comments whether at least the majority of maintenance rounds are completed for this year or at all whether still 50% is to come. That's the first question.
Secondly, related to the conference call, last month, So you mentioned that, at the dense spot rate and contract prices of methanol, you were basically generating about a 30% methanol profit margin in Europe and about 50% still in the U. S. Could you provide us with a little bit of an update, with current lower contract prices in methanol and maybe the potential for higher natural gas prices in U. S. Towards the end of the year, what the sort of average or the exit rate may be in terms of profit margins, in US and Europe.
And then, thirdly is is on the commercial partnership. So over the last 2 years, you've entered into a number of commercial partnerships, or even more explicit with ADNOC and Diner Noble, Could you provide us with some granularity of where you have achieved synergies and where you see further opportunities for synergies, with these partners? Thank you.
I'll ask for the, the partnership question first, and then Ahmed will get the turnaround, questions. So so basically, there's completely 2 different types of, partnerships. What we have in the US is a partnership aimed at consolidating sales forces and providing our customers with multiple supply points and, to, improve on logistics and, reduce freight costs. So what we have done with the N7 is that we created, for our customers, numerous points where they can access, a DAF supply points, and, generated the redundancies. And the joint venture with ADNOC is, involves actually, an equity participation So it's a share swap and a, and a full merger.
So then we are also, in addition to the logical commercial synergies But for example, it makes no sense for plants, North Africa, like Algeria to go to India, and for, 13 to ship into the US or, Western Hemisphere, we we have already seen a big chunk of the, commercial synergies materialize, from the last court So now we are a a targeting, a much more efficient distribution channel which is resulting in higher net backs and higher margins. In addition, there are multiple additional areas of synergies that we are already benefiting from. One of them being, operational, cooling the plant has similar technology, best practices and certain cost reductions that are, on the way to actually exceeding our announced synergies target for Thirties Group. As you have seen in our press release today, we have announced an additional $20,000,000 of, potential savings that we are targeting for materialization in the coming few years, and some of these initiatives have already started. We also mentioned that we are undergoing an effort to streamline our, debt for the Forti Globe Assets.
And this should result also in a similar saving in our interest expense for the 330 Globe. Uh-huh. Ahmed, you can comment on the turnarounds.
Sure. So, Lisa, thanks for your question. The turnarounds, I mean, we, Alyssa, we don't go into detail, but I mean, as we mentioned, Q1 shouldn't be annualized, right, because it had a lot of, you know, cash payments for late Q4 CapEx and and it was that Walmart turnaround and the ongoing turnaround for BioMCN. So I think just given the picture and and some of the deferrals we have, I mean, I think that can directionally you know, give you a sense of the intensity of CapEx for the balance of this year. And we do have one of these confirmed turnaround that we're moving to next year.
On the nitrogen side. With regards to, let's see. You had another question on the on the update on what do the margins look like, for our methanol group because we've given some guidance around that, previously. So despite, you know, obviously, the fall in in spot in contract pricing that we've seen in the US and the fall in spot pricing, while contractors remain fixed in Europe, we're still seeing margins, you know, north of 35%, when you're when the plants are running at full utilization, you know, even at the levels we're talking about here, That reiterates what most of it said in the earlier comments, which is our focus, you know, throughout on having well positioned assets at the low end of the cost curve where we can distribute into a customer base that's close by at reasonably strong netbacks. And we've gotten the additional push by having natural gas prices, fall precipitously in Europe, to levels sub-two dollars in MMBtu and even in projected natural gas price in Europe staying in the low twos for the next several months at least, during this volatile time.
For the U. S, you know, if you could probably just do some math around that, and see if you had another $20.30 increase or $0.40.50 increase in Henry Hub, what that does to the margin. But I would say that the phenomenon where Europe is trading below Henry Hub on a like for like basis does suggest that there could be some other, market effect like demand destruction for LNG exports or additional, gas supply coming to markets when you're, you know, approaching the $3 in MMBtu with global LNG prices where they're at in Europe and Asia.
Okay. Thank you. Thank you very much. Very helpful.
Thank you. Next question comes from the line of Michael Patel from Derenberg. Please proceed.
Yes. Hi, Ron, and thanks for taking my questions. Just firstly, on pricing, we also seen the rear prices come under a bit of pressure during April, May. Given we had the Indian import tender last week, I'm just curious what that could add for momentum in the coming weeks and whether you think from a global context, we'll see more Indian import tenders, in light of the current COVID 19 pandemic and, secondly, just a follow-up on natural gas. Can you just remind us what your hedging policy is?
In the US and in Europe and how that's changed, given what's going on in the energy markets right now. Thanks.
So the Indian tender will serve primarily to, lower the inventory levels for or most producers coming into June. So, with the shipment date by mid June, you can almost as fairly assume that everybody outside North America will have very little volumes to sell post the, the shipments to India. Including what we're seeing in China, where they are favoring domestic sales than lower priced Indian destinations. So, which what this will do is that it will enable the summer to start from a much better, inventory level, than than last year, for example, where we believe that we would go into the summer with minimal inventory, applying for us and for many other about, produce other producers and competitors. So this is a and the Indian tenders will continue at the rate of, a tender every 4 to 6 weeks.
Domestic demand has been very strong, so that will continue into the summary. While you start seeing, more Latin American demand, starting in July, as well. So, prices have come down yet, in the last few weeks, but that is normal as you approach the tail end of booking for the season with most suppliers now looking for late June shipment, but pretty much the 2nd quarter is identified in terms of where most of the suppliers know where they're selling the product. What was your other question? Sorry.
It was just for natural gas. Can you just remind us what the, the hedging policy is in the in Europe.
So in the in the US, I think we have a collar that protects us from gas prices going much higher, that applies for a portion of Natgasoline. Other than that, I think, starting from, March. We have very little hedges in place, if at all in most plants.
Thank you.
Next question comes from the line of Steve Byrne from Bank of America. Please go ahead.
Yes. Thank you. The comment about one of the strongest ammonia, application seasons in April, and you've seen it a long time. I was curious if if you had a view as to whether that may have, cannibalized some demand for urea and UAN, I. E.
Where growers just taking advantage of the favorable weather and the pricing on the ammonia to shift more of the nitrogen load towards ammonia and could that mean less urea and or UAN as, throughout the rest of the spring season?
Sure. I can take that. So, I mean, it's a good point because, obviously, as they've had ammonia, you know, can in in certain areas, and there's not as much switching because people have equipment for ammonia versus UAN versus urea. You could have some switching happen. I'll note, Steve, that also, obviously, Q4 last year, the fall application of her ammonia was a disappointment.
So there was some needed nutrients that needed to get into the ton to get into the, into the ground to compensate for a difficult, fall application season here in the spring application. Also, I think some of the producers with flexibility, including ourselves, have switched a little bit, some production from UAN into urea, DES and ammonia production because UAN tends to convert more nitrogen tons at the same time. So there was a bit more ammonia in the system, and this helped, you know, take in some of the slack, of ammonia in the system. The, from what we're seeing on the ground, you know, there may have been some incremental switching from UAN in the Eastern Corn Belt. But largely, you know, we continue to see a good application of UAN in, starting up in the last few weeks.
And then we expect to see a strong sidedress from the customer base later in May and into June for UAN, which is our primary product.
The the comment about, inventory levels likely to be at very low levels at the end of the spring season seems very well reasoned. I was curious as to your view as to maybe any changes in the sentiment of your buyers this summer, given the summer, the forward futures contracts for corn are likely to be a dollar a bushel below where they were last summer. Is it is it something that you're concerned about about whether or not there could be a deferral of that purchasing demand this summer?
We we we it's too early to, to tell, and the parts of it is also speculation around what will happen with the ethanol in the second half of the year. So, with the COVID nineteen, the, the world is starting to open up for business and more consumption, and you might have just read that an hour ago, sadly announced another 1,000,000 barrel cut in oil production. So we're not assuming that the second half would see the same at least that's what the forward markets are saying on the oil price. And hence, you will have less drama on the ethanol side and should should then end some corn, price recovery. So we're not too concerned about, farmers making significant shifts.
Remember, last year, we had the question of what will the, the China trade war do to farmers, positioning for corn and soybean. And at the end, I mean, it turned out almost not materially different, than what we'd expect.
And if I may just squeeze one more in here, I was curious as to your view on globally lower energy prices, particularly, natural gas, as a feedstock for for nitrogen. Are you seeing any meaningful increases in global supply as a result of of the lower energy costs?
Actually, we believe that every plant that can produce currently stopped producing. We don't know of any plants barring 1, isolated, plants in Ukraine or China, if you are but the Chinese plants have also been shut down primarily for environmental reasons. So you can say that most plants are now operating, at full capacity despite that, we're seeing prices that are probably 10% to 15% lower than last year going into the summer, but, oh, yes. So, any improvement in, in demand with no, major capacities coming on stream in the coming 3, 4 years. Should should aid, accelerate the balance of supply demand.
Thank you. Next question comes from the line, sorry, of Faisal Osmes. Please go ahead. From Goldman Sachs. Hi.
Thank you. This is Faith Filasner from Goldman Sachs. Just a few questions on my end. Starting off with the kind of how to think about volume growth in Q2 versus last year. I know you don't like to give targets on production, but just kind of maybe if you can point us again through the outages that you had last year?
And then in Q2, if any, and how we should think about the turnaround there? The second question I have is when looking at the Vertiglogs business, what was the like for like growth in EBITDA excluding if that's something you can share? And then the second question I have relating to 1st April is when looking at the quarter on quarter revenue growth You've had a bit of growth in revenues, but then EBITDA declined Q on Q. Is it possible to kind of share the reason behind that Thanks. So on the Fernti Globe side, I think the The main issue for that is pricing.
So you have, some pricing, differentiation and also a 15, outage that happened. I think we will have good volumes, production volumes in Q2, but I don't want to go into specifics and comparisons with Q2 last year, but we're now in mid May and we, we're seeing a continuation of the trends and of the good volume production in most of our plants. Sorry. What was the other question? Yeah.
So the 3rd question is just if I could do when thinking about, what was the like for like growth in Q1 for purchase build excluding the add up contribution? So, So first, had a good quarter in terms of production. We have highlighted that in the release that production was up 50%. So you'd have to do uh-uh, the math on your own. I think Hans can get you that offline, give you some more color on that.
Perfect. Thank you.
There are no more questions at this time. Please continue.
Okay. I want to thank everybody for, participating in the call and look forward to our next call. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may all disconnect.