INVESTOR PRESENTATION September 2019
2 GRUPA AZOTY AT A GLANCE GRUPA AZOTY GROUP Grupa Azoty, Poland’s largest chemical group CONSOLIDATED REVENUE FOR 2018 (PLNm) and a significant chemical industry player in the EU market, is one of the EU’s major 9,999 Grupa Azoty Group’s consolidated revenue chemical producers offering a diversified product portfolio – from mineral fertilizers 764 Consolidated EBITDA adjusted 777 and engineering plastics through OXO products to melamine. 8% EBITDA margin 8 Net profit/(loss) adjusted 65 4 locations of main production plants 60 group companies approximately 15,000 employees EU’s No. 2 in mineral fertilizers EU’s No. 3 in PA6 Adjusted – net of one-off items
3 GRUPA AZOTY AT A GLANCE KEY DATA FINACIAL RESULTS PLNm MARKET H1 2018 PLN 3.7bn CAPITALISATION REVENUE 6,103 SHARES 99,195,484 shares EBITDA* 970 EBITDA MARGIN 16% min/max price NET PROFIT* 420 6 PLN -113 PLN NET DEBT 2,460 WSE: WIG30, mWIG40, WIG- NET DEBT/EBITDA 2.09 STOCK CHEMIA, WIG30, mWIG 40, (ratio) INFORMATION WIG, WIG-Poland FOREIGN INDEXES: MSCI, FTSE ESG: RESPECT INDEX/WIG-ESG, FTSE4GOOD, MSCI ESG * Data adjusted for one-off items
4 GRUPA AZOTY AT A GLANCE DIVISION OF RESPONSIBILITIES AMONG MANAGEMENT BOARD MEMBERS Vice President of Vice President of President of the Vice President of Vice President of Member Vice President of the Management the Management Management Board the Management the Management the Management of the Management Board Board Wojciech Wardacki, Board Board Board Board Grzegorz Witold Szczypiński PhD Mariusz Grab Paweł Łapiński Artur Kopeć Tomasz Hryniewicz Kądzielawski, PhD Director General Management Production Procurement Grupa Azoty S.A. Controlling Innovation Finance and HR policy assets strategy Disclosure policy Raw material Investment R&D Investor Plant safety Agro Segment and and product projects programmes Relations communication integration Environment Plastics Segment CSR Infrastructure IT protection Organic Synthesis Audit and risk Logistics Segment President of the Production Management integration Board Grupa Azoty POLICE
5 GRUPA AZOTY AT A GLANCE BROAD PRODUCT PORTFOLIO Revenue 2018 49% Fertilizers 46% AGRO FERTILIZERS Compo Expert 14% Revenue H1 2019 2% 31% 24% 1% CHEMICALS 13% 2% OTHER 2% 16% ENERGY PLASTICS
6 GRUPA AZOTY AT A GLANCE 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 (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) 6
OPERATIONS
8 OPERATIONS GROUP’S BUSINESS BY GEOGRAPHY 9 Poland EUR THE WORLD 48% UE 2,053 Asia 37% 4% 578 481 North America 126 100 77 3% 138 700 105 535 509 108 15 5 35 3 47 South America 85 2% 155 64 25 70 1 8 4 48 12 7 Other Europe 5% Africa 1% H1 2019 REVENUE PLNm Agro Fertilizers Commercial Grupa Azoty Compo Expert Production units Logistics Stabilisation units representatives Plastics Chemicals Energy
9 OPERATIONS FROM RAW MATERIAL TO PRODUCT GRUPA AZOTY GROUP Pigments Titanium Titanium Ilmenite Oxygen Natural gas Nitrogen white slag Sulfuric Syngas Adipic Urea Propylene Methanol Benzene Sulfur and hydrogen product acid acid (UREA) ion Terephthalic UAN Phosphate acid Aldehydes Formalin Phenol Oleum Ammonia (UAN) rock OXO Nitric Phosphoric Trioxane C-non Mixed acid alcohols acid acid Ammonium Dolomite Fertilizers Fertilizers Plasticizers POM Caprolactam nitrate NP NPK / PK (AN) Raw materials – procurement Potassium Calcium am chloride monium nit Ammonium Agro Fertilizers PA 6 rate (CAN) sulfate (AS ) Pulaska Plastics OXO ALCOHOLS Ammonium Modified sulfate nitra Melamine plastics Own production te (ASN) Liquid fertilizer
10 OPERATIONS FEEDSTOCK COST ANALYSIS GRUPA AZOTY PUŁAWY Coal FEEDSTOCK CONSUMPTION BY GRUPA 9% 10% Benzene AZOTY GROUP 11% Energy IN 2018 Natural gas 60% GRUPA AZOTY POLICE Other Gas 18% 4% Sulfur 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 Phenol chloride 6% rock 7% Coal 6% 6% 4% 11% Caprolactam 11% Ammonia 21% Gas 31% Phenol BUSINESS
11 OPERATIONS ENERGY COMMODITIES GAS CONSUMPTION – 2018 PRICES [YOY] Q2 2019 on Q2 2018 change 12% 290 ELECTRICITY PLN/MWh 22,168 thousand TOTAL 2018 240 MWh 190 GRUPA AZOTY 140 GRUPA AZOTY Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 PUŁAWY Electricity … POLICE Q2 2019 on Q2 2018 change 10,917 HARD COAL -26% 4,617 100 USD/t thousand MWh thousand MWh 80 60 40 GRUPA AZOTY GRUPA AZOTY Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Hard coal… KĘDZIERZYN S.A. Q2 2019 on Q2 2018 change 76% 4,373 EUR/t 2,261 22 CO 2 [YOY] thousand MWh thousand MWh 17 12 7 2 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 GAS SUPPLY SOURCES – H1 2019 EEX Q2 2019 on Q2 2018 change GPL* – 37% 140 TGE* – 33% NATURAL GAS 120 PGNiG – 96.4% PLN/MWh 100 80 other – 3.6% 60 40 sty 17 kwi 17 lip 17 paź 17 sty 18 kwi 18 lip 18 paź 18 sty 19 kwi 19 GPL * Gas - PPX* *Excluding transmission
12 OPERATIONS AGRO FERTILIZERS H1 2019 2018 REVENUE PRODUCTION CAPACITIES Revenue: Revenue: Yara PLN 4.9bn PLN 3.7bn Grupa Azoty No. 2 Borealis EBITDA: EBITDA: in EU Agrofert PLN 621m PLN 82m Eurochem Fertiberia EBITDA MARGIN: EBITDA MARGIN: No. 1 2% 17% Achema JSC in Poland Nitrogenmuvek Rt. Groupe Roullier TARGET MARKETS Azomures S.A. [tt] 0 5 000 10 000 15 000 Source: Fertilizers Europe Other Europe Other EU 3% countries 21% Asia Poland 0.3% 73% Africa 0.3% North America South 1% America 2%
13 OPERATIONS COMPO EXPERT REVENUE SYNERGIES Q2 Q2 Q/Q H1 1H H/H (PLNm) 2018* 2019 change 2018 2019 CHANGE 70 performance improvement initiatives identified, mainly in procurement, production, Segment revenue, including: 385 369 -4% 851 868 2% technology, and IT Granular NPK 129 111 -14% 316 311 -2% Knowledge, capabilities and experience of the fertilizers two companies in R&D combined SRF & CRF 86 82 -5% 190 194 2% Optimisation of the COMPO EXPERT Group Fertigation and organisational structure 115 128 11% 234 251 7% foliar fertilizers Fourfold reduction in corporate financing costs Liquid fertilizers 45 45 0% 98 96 -2% and biostimulants EBITDA 30 41 37% 71 86 21% EBITDA margin 8% 11% +3pp 8% 10% +2pp * Proforma data SHARE OF THE AGRO SEGMENT Q2 2019 23% of segment revenue 20% of segment EBITDA
OPERATIONS 14 CHEMICALS PRODUCT CATEGORIES H1 2019 2018 REVENUE Revenue: Revenue: Titanium white PLN 3.1bn PLN 1.4bn Melamine 13% 17% EBITDA: EBITDA: Other Urea PLN 167m PLN 282m 21% (technica l grade) 21% EBITDA MARGIN: EBITDA MARGIN: OXO alcohols 9% 12% 20% Plasticizers 8% No. 3 No. 5 No. 4 PLASTICIZERS MELAMINE OXO ALCOHOLS in EU in EU PRODUCTION in EU CAPACITIES OCI Melamine BASF ExxonMobil Borealis Group BASF Oxea Group Evonik Ineos Grupa Azoty Polynt Grupa Azoty Grupa Azoty BASF SE Deza Perstorp OXO Azomures S.A. Perstorp OXO AB Oltchim SA Valtris 0 50 100 150 200 0 200 400 600 0 100 200 300 400 500
15 OPERATIONS PLASTICS PRODUCTION CAPACITIES H1 2019 REVENUE 2018 POLYAMIDE 6 Revenue: Revenue: BASF PLN 791m PLN 1.6bn No. Lanxess 3 in Grupa Azoty EU EBITDA: EBITDA: Aquafil PLN 192m PLN 81m DSM Radici No. 1 Domo in EBITDA MARGIN: EBITDA MARGIN: Rhodia Poland 12% 10% Ube Beaulieu Nurel 0 50 100 150 200 250 Other Source: PCI Nylon, YellowBook 2015 Europe Integrated 2% Other EU countries Asia Africa 68% 14% 1% North America Poland 2% 12% South America 1%
INVESTMENTS
17 STRATEGY STRATEGIC DIRECTIONS Our mission Create value for the Company and the national economy by delivering safe, Reinforce leadership Complete the Group useful and innovation-driven chemical in agricultural consolidation process products solutions in Europe 1. 2. Our vision Deploy state-of-the-art and comprehensive chemical industry solutions that meet stakeholder Strengthen the second Develop and expectations operating pillar by implement innovations expanding the non- to drive growth of the fertilizer business chemical industry 3. 4.
18 GRUPA AZOTY – INVESTMENTS INVESTMENTS CAPITAL EXPENDITURE IN H1 2019 CAPEX PROJECTS IN H1 2019 CAPEX in including: (PLNm) 200 GROWTH CAPEX 202 PLNm 150 MAINTENANCE CAPEX 60 100 MANDATORY CAPEX 22 200 PURCHASE OF FINISHED GOODS 30 50 150 OTHER (COMPONENTS, MAJOR 73 200 OVERHAULS) 0 100 TOTAL 387 GK Police 150 200 50 100 150 0 CONSOLIDATED CAPEX – CASH FLOW 439 50 GK Puławy 100 0 50 GK Kędzierzyn 0 2019 CAPEX* ≈ PLN 1.3BN Tarnów *Excluding equity investments
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