INVESTOR PRESENTATION May 2018 @Grupa_Azoty #GrupaAzoty1Q18
GRUPA AZOTY AT A GLANCE NO 3 IN NO. 2 IN THE EU IN MINERAL POLYAMIDE & AMONG THE FERTILIZERS MELAMINE IN EU LARGEST LARGEST BALANCED CHEMICAL CHEMICAL GROUP GEOGRAPHICAL COMPANIES PRESENCE IN POLAND NO 5 IN NO. 3 IN THE EU IN THE EU PLASTICIZERS & IN COMPOUND FERTILIZERS OXO IN EU RESPECT INDEX FEATURED MEMBER OF LISTED ON WSE STABLE FINANCIAL TRADE IN MSCI AND FTSE POSITION SINCE 2008 FTSE4GOOD ASSOCIATIONS INDICES EM INDEX 2 GRUPA AZOTY AT A GLANCE
SHAREHOLDING STRUCTURE EBRD 2,87% Others Opansa 26,10% Enterprises Limited 9,50% TFI PZU S.A. 8,60% Norica ING OFE (Open directly/indirectly Pension Fund) Rainbee Holdings 19,47% 9,96% Limited 9,90% State Treasury 33,00% Norica 0,07% Latest notification – 28th June 2017 3 GRUPA AZOTY AT A GLANCE
4 GRUPA KAPITAŁOWA GRUPA AZOTY DIVISION OF RESPONSIBILITIES AMONG MANAGEMENT BOARD MEMBERS Vice President of Vice President of Member of the President of the Wiceprezes Vice President of the Management Management the Management Management the Management Zarządu Board Board Board Board Józef Rojek Board P.Łapiński A.Kopeć W.Szczypiński G.Kądzielawski W.Wardacki Director General Production assets Infrastructure Finance Investments Management and Grupa Azoty S.A. HR Research and Technical safety Agro Segment Growth Strategy development IT and infrastructure Audit and Risk Logistics Environmental Plastics Segment IR protection Communication Energetic Strategic and Organic Synthesis resources Social dialogue Technical Segment procurement Procurment CSR Production M&A Integration President of the Management Board Grupa Azoty POLICE
ACQUISITIONS SINCE 2010 • controlling interest in Puławy (up to 95.98%) 2013 • 99.33% interest in Siarkopol (99.33% in 2018)* • 55% interest in AIG, Senegal (GA Police) 10.0 9.0 9,6 9.9 9.8 • 10.4% interest in Puławy in the first 2012 tender offer 7.1 66% interest in Police • 2011 • 41% interest in Kędzierzyn 5.3 • 100% interest in ATT Polymers GmbH 2010 53% interest in Kędzierzyn • 1.9 1.4 1.3 1.2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Consolidated revenues PLN bn * Up to 99.33% in 2018 due to the acquisition of employee shares 5 GRUPA AZOTY AT A GLANCE
CORE BUSINESS Grupa Azoty Police ZMPP BBM Fosfory Port NPK, P Urea, NPK, NP, NS, Ammonia, TiO 2 Terminal Grupa Azoty Puławy AN, UAN, Urea, AS, Melamine, CPL Grupa Azoty Siarkopol Sulfur Grupa Azoty ATT Polymers Grupa Azoty S.A. PA 6 AN, CAN, ASN, AS, CPL, PA 6, POM Compounding Z. A. Chorzów S.A. Grupa Azoty Kędzierzyn NPK, N, P, K AN, CAN, Urea, OXO, UAN Logistics Plasticizers Production GRUPA AZOTY AT A GLANCE 6
BUSINESS @Grupa_Azoty #GrupaAzoty1Q18
BROAD PRODUCT PORTFOLIO APPLICATIONS SEGMENTS BY SHARE IN 1Q2018 REVENUE PRODUCTS AND USE AN, CAN, NPK, AS, ASN IN AGRICULTURE TO INCREASE FERTILIZERS UREA HARVEST VOLUMES AND 55% 49% 57% UAN, AMMONIA QUALITY SULFUR MINING AUTOMOTIVE, CONSTRUCTION, OXO PRODUCTS 12% CHEMICALS 31% FOIL AND COATING, HOUSEHOLD MELAMINE, PIGMENTS APPLIANCES, FOOD PROCESSING TECHNICAL-GRADE UREA AND TEXTILE INDUSTRIES POLYAMIDE PLASTICS AND AUTOMOTIVE PLASTICS 16% CAPROLACTAM INDUSTRIES OWN CONSUMPTION, ELECTRICITY ENERGY 3% SALES OF ELECTRICITY AND HEAT AND HEATING WATER TO LOCAL USERS CATALYST PRODUCTION, CATALYSTS, OTHER 1% LABORATORY SERVICES, SUPPORT SERVICES, LABORATORIES OTHER LOGISTICS, MANAGEMENT, ENVIRONMENTAL PROTECTION BUSINESS 8
REGIONAL STRUCTURE OF SEGMENTS GEOGRAFIC STRUCTURE IN 2017 European Union 1 Other Europe 35% 3% Asia 0% 0% 4% 1% North America 1% 0.5% 41% 32% 34% 7% 1% 58% 25% 9% 92% 26% 34% Poland 39% 55% 4% 3% Africa 25% 2% 17% 65% 4% South America 3% 1% 79% 28% 67% 5% Agro Fertilizers Plastics Chemicals Energy Other Activities 1 Excluding Poland 9 BUSINESS 9
COST STRUCTURE Other Depreciatio 165 n Other 171 587 Depreciation Labour 518 costs 1 399 Labour costs 1 300 Taxes 338 RAW MATERIALS Taxes Services 323 990 Services 1 039 Other 17% Gas 36% Energy 9% Propylene Benzene Raw materials 8% Raw 4% 4 980 materials Potassium Fine coal 5 487 Phosphate chloride Phenol 6% rock 7% 7% (PLNm) 2016 2017 6% BUSINESS 10
11 GRUPA AZOTY GROUP Raw materials PRICES OF NATURAL GAS DAILY QUOTATIONS 80 EUR/MWh USD/MWh 25 20 70 60 20 15 50 15 40 10 10 30 20 5 5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018-01-01 2018-01-08 2018-01-15 2018-01-22 2018-01-29 2018-02-05 2018-02-12 2018-02-19 2018-02-26 2018-03-05 2018-03-12 2018-03-19 2018-03-26 PPX* TTF DA* GPL DA * Russia Federal Tariff Service USD / MWh * bez przesyłu PRICES OF HARD COAL PRICES OF ELECTRICITY PLN/MWh USD/t 100 190 90 180 80 170 70 160 60 150 50 140 40 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q42017 Q1 2018 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q42017 Q1 2018 IRDN FX ARA BUSINESS
AGRO - FERTILIZERS Jan- Jan- Change (PLNm) 2016 2017 March March Q/Q EXTENSIVE PORTFOLIO OF FERTILIZERS 2017 2018 Segment revenue 5 116 5 028 1 483 1 212 -18% including: AP/ MANUFACTURER AS UREA AN CAN ASN UAN NPK/ Nitrogen MIX 2 989 2 988 904 796 fertilizers, -12% and ammonia YARA Compound 1 669 1 680 432 327 -24% fertilizers Grupa Azoty EBITDA 600 484 252 168 -33% Agrofert EBITDA margin 12% 9.6% 17.0% 13.9% -3.1 pp Borealis CAPACITIES Fertiberia YARA Grupa Azoty Eurochem Agrofert POLAND Achema JSC Borealis 1 Fertiberia Timac Agro Eurochem Azomures EU Achema JSC 2 Timac Agro Petrokemija Azomures Petrokemija [tt] 0 5 000 10 000 15 000 Source: Fertilizers Europe BUSINESS 12
STRATEGY FOR THE AGRO FERTILIZERS SEGMENT STRATEGIC INITIATIVES TARNÓW Granulation Plant II 1200 t/d Ongoing investment projects: CAPEX – PLN 141m New fertilizer production unit in Puławy Completion of granulation plant project in Tarnów Optimisation of production processes Extending the value chain towards specialised products PUŁAWY Entering the market of services for Nitric acid unit 1000 t/d precision agriculture Neutralisation unit 1300 t/d CAPEX – PLN 695m Fertilizers production line 600 t/d Reorganisation of trade and CAPEX – PLN 385m distribution Adapting the product mix to customer expectations Taking up M&A opportunities as they arise BUSINESS 13
CHEMICALS Jan- Jan- Change MELAMINE (PLNm) 2016 2017 March March Q/Q 2017 2018 Segment revenue 2 295 2 789 687 769 12% OCI Melamine including: OXO alcohols 452 557 136 158 16% Poland Grupa Borealis Plasticizers 187 222 61 66 8% 1 Urea (technical Grupa Azoty 396 582 152 147 -3% grade) Melamine 443 476 119 132 11% BASF SE EU Titanium white 295 370 85 106 25% 3 Azomures S.A. EBITDA 271 348 107 127 19% [tt] EBITDA margin 12% 12.5% 15.6% 16.5% 0.9 pp 0 20 40 60 80 100 120 140 160 PLASTICIZERS* OXO** ExxonMobil Basf Poland Basf Poland 1 Oxea Group 1 Evonik Polynt Ineos Grupa Azoty Perstrop OXO AB EU OXEA GROUP EU Grupa Azoty 5 5 DEZA Perstorp OXO AB Oltchim SA [tt] [tt] 0 100 200 300 400 500 0 100 200 300 400 500 * Production capacities for phthalate plasticizers and terephthalate plasticizers ** Production capacities for 2-EH, N-butanol, isobutanol Source: Plasticizers Alkohols 2013 and Plasticizers (UE) 2013 BUSINESS 14
STRATEGY FOR THE CHEMICALS SEGMENT PRODUCTION CAPACITIES STRATEGIC INITIATIVES [tt] Ongoing investment projects: - R&D work on extension of the product chain, with particular focus on polyesters and non-phthalate plasticizers Melamine Titanium white OXO alcohols Optimisation of production processes Puławy Police Kędzierzyn Development of specialist esters Development of the catalyst segment Developing new masterbatch applications BUSINESS 15
PLASTICS Jan- Jan- Change (PLNm) 2016 2017 March March Q/Q 2017 2018 Segment revenue, 1 118 1 419 411 411 • Polyamide 6 (PA6) including: • Caprolactam Polyamide 691 969 239 339 42% Caprolactam 329 372 149 50 -66% -33 221 66 60 EBITDA -9%% EBITDA margin -3% 15.6% 16.1% 14.6% -1.5 pp. APPLICATIONS IN KEY SEGMENTS* POLYAMIDE 6 0 5 10 15 20 25 30 35 40 % BASF* Automotive Lanxess* Grupa Azoty* Films and coatings Aquafil* Poland Machine building DSM* 1 Electrical and electronic Radici applications Domo* Europe Consumer goods Rhodia 3 Nyobe Household appliances Ube* Other Nurel [tt] 0 50 100 150 200 250 *Consumption in Europe Source: PCI Nylon, YellowBook 2015 Source: IHS 2017 Integrated BUSINESS 16
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