INVESTOR PRESENTATION Y2019 - April 2020 - Grupa Azoty S.A. (Tarnów)
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INVESTOR PRESENTATION Y2019
April 2020
2 GRUPA AZOTY AT A GLANCE
KEY DATA
FINACIAL RESULTS Y2019 PLNm
MARKET PLN 3.071 bn*
CAPITALISATION
REVENUE 11 308
SHARES 99,195,484 shares EBITDA 1 424
NET PROFIT 408
min/max price
6 PLN -113 PLN
GRUPA AZOTY GROUP
WSE: WIG30, mWIG40, WIG-
STOCK 4 locations of main production plants
CHEMIA, WIG30, mWIG 40,
INFORMATION WIG, WIG-Poland
60 group companies
FOREIGN INDEXES:
MSCI, FTSE, CEEplus approximately 15,000 employees
ESG: EU’s No. 2 in mineral fertilizers
WIG-ESG, MSCI ESG
FTSE4GOOD EU’s No. 3 in PA6
*data as of 1st January 2020
3 GRUPA AZOTY AT A GLANCE
OWNERSHIP STRUCTURE
STATE TREASURY
Other
- Government of Poland
25.75% - Represented by the Chancellery
of the Prime Minister
TFI PZU S.A.
8.60% Opansa
Enterprises TFI PZU S.A.
Limited
Norica 9.51%
- Financial investor
indirectly
19.82%
Rainbee ING OFE (NN OFE)
Holdings
ING OFE Limited - Financial investor
9.96% 9.90%
Norica Holding NORICA HOLDING S.À. R.L.
S.à.r.l.
- Subsidiary of Acron and Mr. Viatcheslav
State 0.41%
Treasury Kantor
33.00% - Shareholder since 2012
- Norica and its subsidiaries hold 19.82%
of shares
Free float – 28.62 %
Based on official notifications received by the Company
4 GRUPA AZOTY AT A GLANCE
CORE BUSINESS
Grupa Azoty Police
NPK, Urea,
Fosfory
Ammonia, TiO2
NPK
Grupa Azoty
Grupa Azoty Puławy
ATT Polymers
N Fertilisers,
PA6
Melamine, Urea, CPL
Compo Expert Grupa Azoty Siarkopol
Speciality Fertilisers
Sulphur
Grupa Azoty S.A.
Parent Company
PA6, Compounding,
Compo Expert NS Fertilisers
Spain
Speciality Fertilisers
Grupa Azoty
Productions plants
Kędzierzyn Z.A. Chorzów
N Fertilisers, Urea NPK
OXO Products
5 GRUPA AZOTY AT A GLANCE
18
GROUP’S BUSINESS BY GEOGRAPHY
2019 REVENUE EUR POLAND
PLNm 50%
EU 3,897
WORLD Asia
743 35%
4%
1,114
North America
3%
180 274 166
214
201 187 1,260
1,009 959
1
25 3 46
60
1
2
65
South America
223 231
3%
121 45 110
7
73 20 7
Other Europe
21 7 4%
10
Africa 3% 2%
1% REVENUE ANALYSIS 2019
Agro Fertilizers
23% 46% Grupa Azoty Compo Expert
Plastics
13% Chemicals
Production Energy
Logistics Sales representative Stabilisation units 13%
plants Other
offices
IMPACT OF COVID-19
7 IMPACT OF COVID-19
EFFECT OF PANDEMIC ON CHEMICAL INDUSTRY
Agricultural market
The COVID-19 pandemic had no significant impact on the crop segment of Poland’s agriculture.
Fertilizers - Poland
The COVID-19 pandemic had no significant impact on the Fertilizer segment in Poland.
Fertilizers - other countries
Except temporary logistics constraints of local nature, the COVID-19 pandemic had no significant impact on the fertilizer
segment in the EU.
Polyamide
Record-high price declines in polyamide 6. Increased demand from the food packaging and healthcare sectors.
Melamine
Oversupply on Asian markets. Demand is still low due to the pandemic.
OXO ALCOHOLS
Demand expected to pick up in Q3 2020. Very low crude oil prices expected to keep in check any meaningful increase in product
prices.
Titanium white
There has been no reduction in the supply of titanium white in Europe, while the demand is strongly affected by the measures
taken in response to the spread of coronavirus.
Natural gas
Record-high winter temperatures in Europe. Subdued demand due to the COVID-19 epidemic.
8 IMPACT OF COVID-19
IMPACT OF THE PANDEMIC ON THE GRUPA AZOTY GROUP’S
BUSINESS
IDENTIFIED RISK AREAS: MITIGATING MEASURES:
Disruptions in feedstock supply chains and in close monitoring of sales, trading partners’ position and
sale of products due to disruptions in transport collection of receivables
implementation of crisis management rules, particularly in
Risk of temporary disruptions in timely maintenance and investment activities
delivery of capital and maintenance projects cooperation with public administration to develop
appropriate regulations to mitigate adverse economic
Disruptions in continuity of production
consequences of COVID-19 pandemic
processes due to potentially reduced
availability of workforce
Risk of deteriorated liquidity faced by some GDP CHANGES AS FORECAST BY EC
trading partners due to payment backlogs
-4.3% -6.1%
Exchange rate volatility
-6.2% -7%
-7.2% -7.9%
Possible risks of sales disruption in individual
segments -8.2% -9.7%
Source: European Economic Forecast Spring 2020
9 IMPACT OF COVID-19
MEASURES TAKEN IN RESPONSE TO THE CORONAVIRUS EPIDEMIC
Donation of PLN 3,200,000 to institutions and entities which combat COVID-19 (PLN
750,000 from Grupa Azoty S.A., Grupa Azoty ZAK S.A., Grupa Azoty Zakłady
Chemiczne Police S.A. and PLN 950,000 from Grupa Azoty Zakłady Azotowe PUŁAWY
S.A.);
Free-of-charge lend of 40 company cars to healthcare establishments for the
purpose of combating the epidemic.
Manufacture of biocidal decontaminant by Grupa Azoty Zakłady Azotowe PUŁAWY
S.A., based on hydrogen peroxide (4.9%), authorisation from the Office for
Registration of Medical Devices and Biocidal Products;
Manufacture of “safe gloves” with antiviral properties, covered with a layer of
silver;
Donation of Tarfuse filaments for the #DrukarzeDlaSzpitali initiative (3D printing of
protective mask and goggle components) and the VentilAid project, a Polish ‘last
chance’ ventilator (on the open source basis);
PLN 300,000 donations from Hyundai Engineering to purchase ventilators for
hospitals in Police
FINANCIAL PERFORMANCE
11 FINANCIAL PERFORMANCE
RESULTS OF THE GRUPA AZOTY GROUP
REVENUE NET PROFIT
(PLNbn) 11,3 (PLNm)
9,6 10
9 489
408
315
8
2016 2017 2018 2019 2016 2017 2018 2019
ADJUSTED EBITDA EBITDA BY SEGMENTS
(PLNm) (PLNm)
965
12% 13%
11%
8%
541
1529 484
348
301 282
1034 1262 777 221 192 208
-28 82 66
2016 2017 2018 2019
2016 2017 2018 2019
ADJ. EBITDA EBITDA MARGIN
AGRO FERTILIZERS CHEMICALS PLASTICS12 FINANCIAL PERFORMANCE
AGRO FERTILIZERS
RESULTS PRODUCTION CAPACITIES
Yara
(PLNm) 2018 2019 Y/Y CHANGE
Grupa Azoty
Segment 4,904 6,716 37%
revenue Borealis No. 2
82 965 1,077% in EU
EBITDA Agrofert
EBITDA margin 2% 14% Eurochem
Fertiberia
Achema JSC No. 1
in Poland
PRODUCT CATEGORIES Nitrogenmuvek
Rt.
Groupe Roullier
Azomures S.A.
Nitrogen-sulfur Compound
fertilizers fertilizers [tt] 0 5 000 10 000 15 000
11% 30%
Source: Fertilizers Europe
Nitrogen fertilizers Specialty
and ammonia fertilizers
39% 20%13 FINANCIAL PERFORMANCE
CHEMICALS
PRODUCT CATEGORIES
RESULTS
(PLNm) 2018 2019 Y/Y CHANGE OXO alcohols
Plasticizers 18%
Segment 3,114 2,639 -15% 8%
revenue
282 208 -26% Other
EBITDA 22%
EBITDA margin 9% 8%
Urea Titanium
(technical grade) white
22% 13%
Melamine
17%
No. 5 No. 4
PLASTICIZERS MELAMINE No. 3
in EU
OXO ALCOHOLS
in EU in EU
PRODUCTION
CAPACITIES
OCI Melamine
ExxonMobil BASF
BASF Oxea Group Borealis Group
Evonik
Ineos Grupa Azoty
Polynt
Grupa Azoty Grupa Azoty
BASF SE
Deza Perstorp OXO
Perstorp OXO AB Azomures S.A.
Oltchim SA
Valtris
0 50 100 150 200
0 200 400 600
0 100 200 300 400 50014 FINANCIAL PERFORMANCE
PLASTICS
RESULTS PRODUCTION CAPACITIES
(PLNm) 2018 2019 Y/Y CHANGE POLYAMIDE 6
Segment 1,562 1,456 -7% BASF
revenue
Lanxess
EBITDA
192 66 -66% Grupa Azoty
Aquafil No. 3
EBITDA margin 12% 5% DSM in EU
Radici
Domo
Ube
PRODUCT CATEGORIES Rhodia
No. 1
in Poland
Beaulieu
Nurel
Natural polyamide 0 50 100 150 200 250 300
86% Source: PCI Nylon, YellowBook 2018
Integrated
Modified
polyamide
6%
Caprolactam
8%15 FINANCIAL PERFORMANCE
ENERGY COMMODITIES
ELECTRICITY PRICES
We expect the downward trend to continue.
280
The Grupa Azoty Group companies have secured the required volumes under their
230 contracts.
180
We are awaiting decisions about reliefs under the Capacity Market Act. Regulations on
130
Electricity (IRDN) the amount of charges come into force as of October 1st 2020, already accounted for
PLN/MWh in the 2020 budget.
PRICES OF HARD COAL We expect prices to continue at recent levels. In Poland, the supply exceeds the
demand in both the producer and the customer segments of the market.
90
The Group companies are parties to long-term contracts securing the required volumes.
70
Deliveries are made as planned.
50
USD/t 30 In mid-year, the EC plans to start its revision of the Community framework for the
Hard coal ARA prices
taxation of energy products.
CO2 PRICES [Q/Q] The long-term growth trend initiated in Q3 2017 is in the correction phase.
27
22 The number of emission allowances held by the Grupa Azoty Group companies is
17 sufficient to cover their CO2 emissions for 2019.
EUR/t 12
7 The EC continues to work on the European Green Deal which will enforce emission
2
EEX
reductions and reduce the allocation of free emission allowances.
NATURAL GAS PRICES 40% year-on-year decline in the average quarterly gas prices according to Gaspool data
120
100 High stock levels maintained in case transit through Ukraine is suspended
80
60 Significant increase in LNG supply on the global market
40
20 Low gas prices in Asia – Europe more favourable to LNG suppliers from the Atlantic
PLN/MWH
region.
GPL* Gas - PPX*
* Excluding transmission.16 FINANCIAL PERFORMANCE
FEEDSTOCK COST ANALYSIS
FEEDSTOCK CONSUMPTION BY GRUPA AZOTY GROUP
Other
Gas
31%
24%
Energy
11%
Benzene
3% Propylene
6%
Fine coal
6% Potassium
chloride
Phosphate rock Phenol 8%
5% 6%17 FINANCIAL PERFORMANCE
FROM RAW MATERIAL TO PRODUCT GRUPA AZOTY GROUP
Pigments
Titanium Titanium
Ilmenite Oxygen Natural gas Nitrogen
white slag
Syngas
Adipic Sulfuric Urea
Propylene Methanol Benzene Sulfur acid
and hydrogen
acid production (UREA)
Terephthalic
UAN Phosphate
acid Aldehydes Formalin Phenol Oleum Ammonia (UAN) rock
OXO Nitric Phosphoric
Trioxane C-non Mixed acid
alcohols acid acid
Ammonium
Dolomite nitrate
Fertilizers Fertilizers
Plasticizers POM Caprolactam
(AN) NP NPK / PK
Raw materials – procurement Calcium am Potassium
Ammonium monium nit chloride
Agro Fertilizers PA 6 rate (CAN)
sulfate (AS)
Plastics Pulaska
OXO ALCOHOLS Ammonium
Modified
sulfate nitra
plastics Melamine
Own production te (ASN)
Liquid fertilizer18 FINANCIAL PERFORMANCE
GRUPA AZOTY GROUP FINANCES AS AT DECEMBER 31ST 2019
SECURED CORPORATE FINANCING AVAILABLE FUNDING
PKO and bank syndicate
Corporate credit facilities 0 500 1 000 1 500 2 000 2 500
• Revolving and umbrella credit facility
• PLN 3,869m Overdraft and multi-purpose
facilities
EBRD
• Term Loan Agreement Other financing sources
• PLN 627m
EIB
• Term Loan Agreement
• PLN 1,043m
NET DEBT BRIDGE
Total corporate financing
• PLN 5,539m
1,049
1,424 291 95
NET DEBT 2018 2019
Net debt calculated as per bank
agreements (PLNm)
2,029 1,850 2,029 1,850
Net debt/EBITDA
2.42 1.36
for 12 months (ratio) Net debt 2019 Capital EBITDA Contribution to GA Other Net debt 2019
expenditure Police share issue
Total debt ratio
48.6% 50.3%
Change in net debt as at December 31st 2019 calculated as per bank agreementsINVESTMENTS
20 MAIN PROJECTS
MODIFIED PLASTICS PLANT – COMPOUNDING
FINISHED Q4 2019
PROJECT SCOPE:
Construction of plastics modification unit
Project implemented within a Special
Economic Zone
Location: Tarnów
Target production capacity: 46tt
Project budget: PLN 115m
PORTFOLIO
Caprolactam
Natural engineering Modified plastics:
intermediate in
plastics: PA 6, PA66, POM, PPC,
polyamide 6 (PA6)
PA6, POM PPH , PBT
production
PROJECT’S KEY BENEFITS:
The project will allow the Group to shift its product mix towards higher-margin segments and
further enhance the value of its PA6 product and others
2021 MAIN PROJECTS IN PROGRESS
POLIMERY POLICE
PROJECT SCHEDULE
PROJECT SCOPE:
- PDH-PP plant
- polypropylene logistics base
Dec 23, • Full Notice to
- propane and ethylene handling & storage terminal 2019 Proceed (FNTP)
Production capacity
– propylene 429,000 tonnes/year
- polypropylene 437,000 tonnes/year
• Start of
Project finance Jan 7, construction by
2020 the General
Location: within the Pomeranian Special Economic Zone Contractor
(state aid of up to PLN 428m)
Budgeted cost of the project: EUR 1.52bn • Test run of the
CAPEX EUR 1.18bn Q2 2022
PDH-PP plant
Hyunday Engineering Co. Ltd as the General Contractor
• Start of
ISB News – distinction under the category Q4 2022 commercial
operation
'Most Reliable in the Fuel and Chemical Sector'
PROJECT’S KEY BENEFITS:
Diversification of revenue streams, additional profits for the Grupa Azoty Group, expansion of
the product portfolio, flattening of business cycles
2122 POLIMERY POLICE
FINANCING OF POLICE POLYMER PROJECT
INVESTMENT AGREEMENT TARGET SHAREHOLDING STRUCTURE *
INVESTOR AMOUNT Grupa Azoty
POLICE
Hyundai (HEC) USD 73m 34,41%
LOTOS
KIND USD 57m Grupa
17,30%
Azoty
Grupa LOTOS PLN 500m 64,93%
HEC &
KIND
17,77%
Grupa Azoty
S.A
GRUPA AZOTY’S INVESTMENT 30,52%
The Grupa Azoty Group has secured its own funding for the Project
for a total amount of USD 464m, including:
“EQUITY” FINANCING STRUCTURE*
• USD 118m – equity contributed to date
• USD 160m – capital to be contributed
LOTOS
• USD 186m – subordinated loans to be contributed
127
Grupa
within the permitted limits of the total “equity” contribution specified in the Azoty HEC &
Group's corporate financing agreements, 345 KIND
including 47% of equity from Grupa Azoty S.A., 53% of Grupa Azoty Police 130
Each Sponsor will provide the following “equity”: 118
60% pure equity
Company's current capital
and 40% loan
USD 720M
The “equity” financing was raised at the full amount agreed with the banks, i.e. USD 720m. The Group also has a safety buffer to cushion
adverse exchange rate movements until hedges are put in place.
* All amounts translated at the USD/PLN exchange rate of 3.95. Grupa LOTOS's contribution was converted from PLN to USD.23 POLIMERY POLICE
THE FACILITIES AGREEMENT FOR THE FINANCING
FACILITY MAX AMOUNT MATURITY
term loan EUR 487,800,000 29 November 2030
term loan USD 537,700,000 29 November 2030
working capital VAT PLN 150,000,000 30 November 2024
facility
working capital loan USD 180,000,000 29 November 2025
CONSORTIUM:
Alior Bank S.A.,
Bank Gospodarstwa Krajowego, Powszechna Kasa Oszczędności Bank Polski S.A.,
Bank Ochrony Środowiska S.A., Powszechny Zakład Ubezpieczeń S.A.,
Bank Polska Kasa Opieki S.A. (the bank coordinating), Powszechny Zakład Ubezpieczeń na Życie S.A.,
BNP Paribas Bank Polska S.A., PZU Fundusz Inwestycyjny Zamknięty Aktywów
the European Bank for Reconstruction and Development, Niepublicznych BIS2,
Industrial and Commercial Bank of China (Europe) S.A. Santander Bank Polska S.A.
Poland,
mBank S.A., ICBC Standard Bank PLC24 POLIMERY POLICE
POLIMERY POLICE
SALE OF POLYPROPYLENE BY END CUSTOMER PRODUCTION CAPACITIES
Construction industry Production forecast for polypropylene after 2022
9% Food storage
Industry packaging (tt./year) - internal estimates of Grupa Azoty Polyolefins S.A.
10% 32% based on data provided by Eurostat
Romania
Automotive Bulgaria
15%
Household Finland
products
Textiles UK
27%
7%
Slovakia
+437 tt. from Grupa Azoty Polyolefins S.A.
Poland
PLANTS LOCALISATION Czech Republic
Hungaria
POLIMERY POLICE
Netherland
Italy
Spain
France
Germany
Belgium
0 500 1000 1500 2000 2500
Source: Own study of Grupa Azoty PolyolefinsS.A. based on data from
the Annual Report 2017 of the PlasticsEurope Polska Foundation25 MAIN PROJECTS IN PROGRESS
NITRATE GRANULATION PLANT
PRODUCTS
PROJECT SCOPE:
Plant for production of ammonium nitrate-based granulated Calcium ammonium nitrate
fertilizers (CAN)
Granulated ammonium nitrate
The plant’s daily production capacity:
1,400 tonnes of CAN
or
1,200 tonnes of mechanically granulated nitrate
Project completion timeframe: 2015 – 2021
Location: Puławy
Capital expenditure: PLN 430m (amended)
PROJECT’S KEY BENEFITS:
Improved quality of fertilizers by applying modern mechanical granulation
2526
MAIN PROJECTS IN PROGRESS
NITRIC ACID AND NEUTRALISATION UNITS
PROJECT SCOPE:
new nitric acid unit 1,000 t/d,
neutralisation unit 1,300 t/d,
fertilizer production line 600 t/d,
upgrade of existing nitric acid lines
Project completion timeframe: 2017 – 2024
Project carried out jointly with Thyssenkrupp Industrial
Solutions AG
Location: Puławy
Capital expenditure: PLN 695m
PROJECT’S KEY BENEFITS:
Higher production capacity, addition of new solid and liquid fertilizers (Ca, K, Mg) to product
range, avoiding downtime (production losses), elimination of bottlenecks in absorption and
cooling, improved production efficiency, consumption rates: ammonia, steam yield, electricity27 MAIN PROJECTS IN PROGRESS
POWER GENERATION UNIT
PROJECT SCOPE:
Construction of a new coal-fired unit
Launch of the unit: 2021
A 100 MWe coal-fired unit
Integrated with the on-site CHP plant
Location: Puławy
Project budget: PLN 1.2bn
PROJECT’S KEY BENEFITS:
The new unit and the upgraded on-site CHP plant will provide Grupy Azoty Puławy with an
energy system appropriate for its needs in terms of electricity and process heat suppliesRESEARCH AND DEVELOPMENT
29 RESEARCH AND DEVELOPMENT
NEW PRODUCTS AND TECHNOLOGIES
SPECIALISED FERTILIZER OFFERING BY GA CHORZÓW
- successful restructuring of the company
- development of compound fertilizers based on potassium nitrate and calcium nitrate
- AZOPLON fertilizers for foliar feeding of crops, fruit and vegetables
- FERTIPLON fertilizers intended mainly for cultivation under cover
LAUNCH OF SALE OF 3D PRINTING MATERIALS
- R&D programme began in 2017
- FDM technology filaments based on PA6 polyamide manufactured by GA
- Online retail store to launch soon
- Research into SLS printing powders and SLA and DLP polymers
PROJECTS ON THE LIST OF NCBiR-RECOMMENDED INITIATIVES
- Total amount of co-financing PLN 20m
- Grupa Azoty PUŁAWY, GA POLICE and Łukasiewicz-INS’s projects third on the list
- Modern fertilizer formulae: functional additives, polymer coating
- Technologies for optimum use of intermediate products and waste products30 RESEARCH AND DEVELOPMENT
OWN PROJECTS: EXAMPLES
1. 3D printing – product innovation
PA6 filaments for FDM
Project launched in 2017
- March 2020 – product commercialised
- May 2020 – launch of online store
SLS powders
Advanced research to obtain SLS powders from PA 6
and other structural polymers
2. Vacuum coating – product innovation
Launch of vacuum metal and non-metal
coating unit
Physical vapour deposition technology
offers a number of advantages over competing solutions.
Work on new types of coatings, e.g. biocidal coatings.31 RESEARCH AND DEVELOPMENT
COOPERATION WITH START-UPS
IDEA4AZOTY
Grupa Azoty S.A.'s business accelerator programme
35 applications, 19 projects in second stage of recruitment
2 applications at evaluation stage, with terms of another 5 under
discussion
SCALE UP
Grupa Azoty S.A. 's participation as Technology Recipient in two projects
implemented by: Krakowski Park Technologiczny, Funding Box
More than 15 accelerated start-ups in both programmes
Implementation: Jan 1 2019 – Dec 31 202132 RESEARCH AND DEVELOPMENT
START-UPS’ PROJECTS: EXAMPLES
1. SatAgro
Agriculture 4.0 - satellite field monitoring
Optimisation of fertilizer application depending on
soil conditions
Pilot 2017
Season 2019: 253 farms, 63 thousand hectares
monitored
2. Sinteco
Diversification of business - organic chemicals
and highly specialised products
Production of high-purity polyglycerols
and glycerine-based polyglycerol esters
Implementation of innovative low-temperature synthesisContact Investor Relations Office ir.tarnow@grupaazoty.com
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