INVESTOR PRESENTATION July 2019
2 GRUPA AZOTY AT A GLANCE GRUPA AZOTY Grupa Azoty, Poland's largest chemical company and a significant chemical industry player in the EU market, is one of the major chemical groups in the EU, offering a diversified product portfolio – from mineral fertilizers and engineering plastics through OXO products to melamine. 4 locations of main production plants 60 group companies 15,530 employees No. 2 in the UE in mineral fertilizer production No. 3 in the EU in PA6 production
3 GRUPA AZOTY AT A GLANCE KEY DATA FINACIAL RESULTS Y2018 PLNm MARKET PLN 4.5 bn* CAPITALISATION REVENUE 9 999 EBITDA 764 SHARES 99,195,484 shares EBITDA adjusted** 777 EBITDA MARGIN 8% min/max price NET PROFIT 8 PLN 6 - PLN 113 NET PROFIT adjusted** 65 WSE: WIG30, mWIG40, WIG- NET DEBT 2 029 STOCK CHEMIA, WIG30, mWIG 40, WIG, INFORMATION WIG-Poland, WIG.MS-PET NET DEBT/EBITDA 2.42*** (ratio) FOREIGN INDEXES: MSCI, FTSE ESG: RESPECT INDEX, FTSE4GOOD, MSCI ESG ** Data adjusted for one-off items *** Net debt/EBITDA increase as at December 31st 2018 was attributable to financing * Market capitalisation at 12.07.2019 of the Compo acquisition on November 26th 2018, taking into account Compo’s EBITDA for 12M 2018.
4 GRUPA AZOTY AT A GLANCE OWNERSHIP STRUCTURE STATE TREASURY Other - Government of Poland 25.75% - Represented by the Chancellery EBRD 2.87% of the Prime Minister TFI PZU S.A. Opansa 8.60% EBRD Enterprises Limited - European Bank of Research and Development 9.51% - Shareholder since 2013 Norica indirectly Rainbee 19.82% TFI PZU S.A. Holdings ING OFE - Financial investor (investment fund) Limited 9.96% 9.90% State Treasury ING OFE (NN OFE) 33.00% Norica Holding - Financial investor (open pension fund) S.à.r.l. 0.41% NORICA HOLDING S.À.R.L . - Subsidiary of Acron and Mr. Viatcheslav Kantor - Shareholder since 2012 - Norica and its subsidiaries hold 19.82% of shares Free float – 25.75 % Based on official notifications received by the Company
BUSINESS
6 BUSINESS CORE BIZNES ZMPP Fosfory BBM Port Grupa Azoty Police ZMPP Terminal NPK • Port Navitrans Urea NPK TiO2 • Logistics Grupa Azoty Puławy Ammonia Urea N fertilizers Melamine CPL Goat TopCo GmbH Grupa Azoty Siarkopol Grupa Azoty Speciality S ATT Polymers fertilizers Grupa Azoty S.A. PA6 Parent Grupa Azoty Z.A. Chorzów S.A. N fertilizers CPL Grupa Azoty S.A. NPK Kędzierzyn • AN, CAN • ASN, AS Compounding PA6 • CPL, PA 6, POM Logistics N fertilizers Urea • Compounding Logistics Production OXO Plasticizers Production
7 BUSINESS BROAD PRODUCT PORTFOLIO SEGMENTS BY SHARE 2018 REVENUE PRODUCTS APPLICATIONS AND USE IN AGRICULTURE TO INCREASE AN, CAN, NPK, AS, ASN AGRO FERTILIZERS HARVEST VOLUMES AND 49% UREA QUALITY UAN, AMMONIA SULFUR MINING AUTOMOTIVE, CONSTRUCTION, OXO PRODUCTS CHEMICALS 31% FOIL AND COATING, HOUSEHOLD MELAMINE, PIGMENTS APPLIANCES, FOOD PROCESSING TECHNICAL-GRADE UREA AND TEXTILE INDUSTRIES PLASTICS AND AUTOMOTIVE POLYAMIDE PLASTICS 16% INDUSTRIES CAPROLACTAM OWN CONSUMPTION, ELECTRICITY ENERGY 2% SALES OF ELECTRICITY AND HEAT AND HEATING WATER TO LOCAL USERS CATALYST PRODUCTION, CATALYSTS, OTHER 2% SUPPORT SERVICES, LABORATORY SERVICES, LABORATORIES OTHER LOGISTICS, MANAGEMENT, ENVIRONMENTAL PROTECTION 7
8 BUSINESS TARGET MARKETS GEOGRAPHICAL STRUCTURE BY SEGMENT IN 2018 PLNm European Union Other Europe 36% 4% Asia 2% 1519 1063 North America 215 1036 1% 16 158 2 1 151 33 34 22 37 2 Poland 9 54% Africa 3554 2% 198 South America 1% 15 12 1191 100 253 155 23 15 185 Agro Fertilizers Plastics Chemicals Energy Other Activities Excluding Compo Expert’s sales markets
9 BUSINESS FROM RAW MATERIAL TO PRODUCT GRUPA AZOTY Titanium Titanium Ilmenite Oxygen Natural gas Nitrogen white slag Phthalic Sulfuric Manufacture of Propylene Methanol Benzene Sulfur Urea anhydride syngas and hydrogen acid Phosphate Terephthalic Aldehydes Formalin Phenol UAN Oleum Ammonia acid rock OXO Nitric Phosphoric Trioxane C-non Mixed acid alcohols acid acid NP NPK/PK Ammonium Plasticizers POM Caprolactam Dolomite Nitrate (AN) fertilizers fertilizers Potassium Calcium chloride Ammonium PA 6 ammonium sulfate (AS) nitrate (CAN) Melamine Modified Ammonium plastics sulfate nitrate (ASN) Raw materials
10 BUSINESS Feedstock cost analysis GRUPA AZOTY PUŁAWY Coal 9% FEEDSTOCK CONSUMPTION BY GRUPA AZOTY GROUP 10% Benzene 11% Energy Natural gas 60% GRUPA AZOTY POLICE Other Gas Sulfur 18% 4% 38% Electricity 4% 6% Coal 15% Phosphate rock 24% Potassium chloride Natural gas 30% Energy GRUPA AZOTY KĘDZIERZYN 9% 4% Fine coal 5% Terephthalic acid Energy 10% 35% Natural gas Benzene Propylene 38% Propylene 3% 9% GRUPA AZOTY S.A. Potassium Fine coal Phosphate chloride 6% Phenol rock 7% 6% Coal 6% 4% 11% Caprolactam 11% Ammonia 21% Natural gas 31% Phenol BUSINESS
ACQUISITIONS
12 ACQUISITIONS CREATING VALUE FOR GRUPA AZOTY THROUGH ACQUISITIONS • Puławy (up to 95.98%) • Transaction completed on • Siarkopol (99.33%) November 26th 2018 • Puławy (10.4%) 10.0 10.0 9.9 9.8 9.6 9.0 • Police (66%) • Kędzierzyn (up to 94%) 7.1 5.3 • ATT Polymers GmbH (100%) • Kędzierzyn (53%) 1.9 1.4 1.3 1.2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Consolidated revenue (PLNbn) 12
13 ACQUISITIONS ENHANCED FERTILIZER PRODUCT PORTFOLIO Fertilizer value pyramid COMPO EXPERT Speciality fertilizers product portfolio Liquid fertilizers Technologically advanced agrochemical products with a higher added value than commodity fertilizers. Designed and biostimulants mainly for high-value crops (fruit, vegetables, ornamental plants). Speciality fertilizers are priced higher, but offer Fertigation many benefits, including slow release of nutrients. Some and foliar speciality products can be used for covered or greenhouse cultivation, as well as for lawns and turf grass. They are fertilizers available in solid form (granules) and as liquids (for soil and foliar application). The most advanced products positively influence certain characteristics of the plants, such as size, SRF | CRF colour or – in the case of fruit and vegetables – taste. Stabilised NPK Volume Margin NPK (SOP-based) NPK (MOP-based) Grupa Azoty Commodity fertilizers product portfolio Standard fertilizers widely applied all around the world. Typically UAN | ASN | CAN contain one or two nutrients. In the case of NPK fertilizers, they are based on potassium chloride. Priced lower that speciality fertilizers. AN | AS | DAP Ammonia | Urea
14 ACQUISITIONS COMPO EXPERT SALES MARKETS (2017) (2018) Americas Western and Central Europe Revenue (FY 2018)* PLN 1 488 m Southern Europe and Africa Asia and Australia Adjusted EBITDA (FY 2018)* PLN 120m Markets reached by COMPO EXPERT products Key sales market * Adjusted for restructurisation and integration one-offs
15 ACQUISITIONS COMPO EXPERT ACQUISITION SYNERGIES DELIVERED BY DEBT REFINANCING INTEGRATION INITIATIVES Appointment of consolidation teams for: Procurement refinanced Agro Segment’s sales and marketing EUR 127m within the EUR 127m cash pool Research and development 127m EUR Manufacturing, technical and technology areas ≈x4 Accounting and financial flows Legal Syndicated Interest Interest Financing debt expense expense from the Corporate supervision Compo Grupa IT Expert Azoty 1. 2. 3. 4. 5. Production Sales synergies R&D synergies Raw material Financing know-how and product synergies synergies synergies
OPERATIONS
17 OPERATIONS FINANCIAL HIGHLIGHTS 2018 AND Q1 2019 PLNm Q1 2019 Y2018 3,365 9,999 Consolidated revenue 764 608 Consolidated EBITDA adjusted*: 777 8% 18% EBITDA margin 8 323 Net profit/(loss) adjusted*: 65 *Data adjusted for one-off items
18 OPERATIONS 2018 REVENUE STRUCTURE AGRO CHEMICALS PLASTICS FERTILIZERS PERCENTAGE 49% 11% 31% 37% 16% 25% SHARE 6,283 3,114 4 904 1,562 FINANCIAL HIGHLIGHTS 164 282 192 82 PLNm Revenue EBITDA Revenue EBITDA Revenue EBITDA Adjusted for the Goat TopCo acquisition – 2018 pro forma data EBITDA MARGIN 9% 12% 2% 3% 18
OPERATIONS 19 ENERGY COMMODITIES ELECTRICITY PRICES [Y/Y] EFFECT ON EBITDA Y2018: TOTAL PLN – 904m PLN/MWh PLN -35m 290 240 NATURAL GAS PRICES PLN -508m 140 35 190 120 30 140 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 IRDN PLN/MWh 100 25 EUR/MWh 80 20 HARD COAL PRICES [Y/Y] PLN -68m 60 15 USD/t 100 40 10 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 80 Average gas price paid by GA PGNiG tariff gas price Imported gas price PPE gas price TTF DA gas price (right axis) 60 22,168,000 MWH TOTAL GAS CONSUMPTION IN 2018 40 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 ARA GRUPA AZOTY CO 2 PRICES [Y/Y] PLN -77m GRUPA AZOTY PUŁAWY POLICE EUR/t 22 10,917,000 MWh 4,617,000 MWh 17 12 7 2 GRUPA AZOTY GRUPA AZOTY Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 KĘDZIERZYN S.A. EEX 4,373,000 MWh 2,261, 000 MWh
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