Financial results of Grupa Azoty after the first half of 2014

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At a conference held in Intercontinental Warsaw on August 14th, 2014, the financial results of Grupa Azoty and the particular member companies were presented.

Reasons to feel satisfied

According to the company CEO Paweł Jarczewski, “despite the decreasing prices in the fertilizers sector, we managed to achieve financial results which are better than the market had expected (…); the strategy we adopted is producing tangible benefits, so do the consolidation activities and the investment program which is currently being implemented(…); thanks to those factors, we are coping better than our competitors even in spite of the fact that the market situation is unfavorable.”

After the first two quarters of 2014, Grupa Azoty had an excellent financial result from its operational activity. Earnings before interest and taxes (EBIT) reached 285 million PLN, while the net profit – 235 million. The revenue from sales exceeded 5 billion PLN. If we compare this time to the same period in 2013, the results appear smaller. However, this is due to the one-off cost of acquiring Grupa Azoty Zakłady Azotowe “PUŁAWY” S.A.. Additionally, the result is still better than it had been forecast by the analysts.

Cheaper resources and the cost of production

In the first half of 2014, Grupa Azoty took advantage of the lifting of some controls on the natural gas trade in Poland. Lower prices of resources on the global market and plentiful supply of resources in the country led to prices of natural gas falling by 7-9% and of coal – by 12-13. Consequently, it was possible to reach EBITDA margin of 13% in the fertilizers segment. The situation concerning the purchase of resources enabled us to boost sales results and enter new markets. The Company was also able to reduce cost thanks to both lower prices of natural gas and coal and synergistic effects in the whole Capital Group.

Strategy till 2020

At the Warsaw conference, the Board of Grupa Azoty presented the Development Strategy until 2020. The company activities have been allocated to main three groups: (1) Organic Growth, (2) increasing efficiency of activities thanks to Operational Excellence Program, (3) Mergers and Acquisitions in the global sense. The main goals of the strategy include: rising ROCE ≥ 14%; 300 million PLN of savings annually thanks to Azoty Operational Excellence Program; M&A strategy of taking over particular companies, whose activity as members of the Group is in line with the philosophy of continued development of the Company.

Grupa Azoty is also planning to allocate 7 billion PLN to investment projects in organic growth. The budget includes funds for the modernization and the construction of new installations, which will extend the chemical manufacturing chain, and for launching installations which produce fertilizers with innovative, modern formulas.

The overall aim of all activities is the confirmation of Grupa Azoty’s place on the list of the top three producers of fertilizers. Effective implementation of these goals will lead to becoming an internationally recognized chemical company, in Europe and on other continents.