Good Q1 for the Group

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The financial result of the first quarter of 2014 was a net profit of 149 million PLN for Grupa Azoty. The company may also take pride in reaching the 21st place in Rzeczpospolita daily ranking of 500 biggest enterprises in Poland.

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First half of the year in “PUŁAWY” with a profit of 37 million

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Our Works have closed the first half of the year with a net profit of 37 million PLN, EBIT of 39 million PLN and EBITDA at 112 million PLN. The revenue from sales reached 1.763 billion PLN.

A downward trend in agriculture and the chemical sectors – the crucial markets for Grupa Azoty “PUŁAWY” – had the most significant impact on the financial results. At the same time, production in the key sectors grew by over 10%, making this year’s fertilization season look promising.

713 million PLN profit for Grupa Azoty

Since the financial results of “PUŁAWY” are of great importance to the results of the whole Grupa Azoty, the Board decided to present the draft consolidated financial results for the whole 2013. Basing on market information, net profit of the Group was estimated at 713 million PLN, EBIT at 702 million PLN, while the revenue from sales reached 9.821 billion PLN!

Optimistic forecast for fertilizers market

– In our view, the fertilization season are entering at the moment looks quite good – believes Paweł Jarczewski, who is the CEO of Grupa Azoty, but is also in charge of the Agricultural Segment in the Group. Also, the purchasing power of farmers grew significantly thanks to direct EU subsidies, which are higher than in 2013 by almost 100 PLN per hectare. We have also witnessed a slight upward movement on the agricultural goods market. Polish domestic cereal prices are among the highest in the region! In the opinion of our experts, the prices of nitrogen-based fertilizers are similar to last year’s prices while DAP and MAP (ammonium phosphate) prices are on the increase.

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“PUŁAWY” has made a profit again

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In the first quarter of 2013/14 financial year, Grupa Azoty Zakłady Azotowe “PUŁAWY” made a net profit of 17.8 million PLN.

It is worth noting that the operating profit of our company in the reported period was 18.6 million PLN, as compared to 37.2 million PLN in the same period of the previous year. Revenue of Grupa Azoty Zakłady Azotowe “PUŁAWY” decreased from 878 million PLN (in the same period of 2012/2013 financial year) to 839.8 million PLN.

Chemical Segment of Grupa Azoty “PUŁAWY” brought 516.7 million PLN revenue from sales, and EBITDA profit of 6.9 million PLN.

Energy Segment produced revenue of 459.7 million PLN, and EBITDA profit of 40.6 million PLN.

Revenue from sales in Other Activity Segment of Grupa Azoty “PUŁAWY” reached 27.6 million PLN, and EBITDA profit was 8.1 million PLN.

 

SELECTED FINANCIAL RESULTS

In thousand PLN

In thousand PLN

In thousand PLN

 

First quarter 2013, period from 2013-07-01 to 2013-09-30

First quarter 2013, period from 2013-07-01 to 2013-09-30

First quarter 2013, period from 2013-07-01 to 2013-09-30

CHOSEN CONSOLIDATED FINANCIAL DATA

 

 

 

Revenue from sales from continuing operations

839 760

877 633

197 987

Gross profit/(loss) from sales from continuing operations

118 768

142 082

28 001

Gross profit/(loss) from continuing operations

20 050

41 085

4 727

Net profit/(loss) from sales from continuing operations

17 914

34 797

4 224

Net profit/(loss) in the period

17 774

34 675

4 190

Total revenue in the period

17 600

34 082

4 149

Net profit/(loss) per Parent Company shareholders

17 605

34 336

4 151

Net profit/(loss) per non-controlling interests

169

339

40

Total revenue for Parent Company shareholders

17 457

33 743

4 116

Total revenue for non-controlling interests

143

339

34

Number of shares

19 115 000

19 115 000

19 115 000

Net profit/(loss) per one common share (in PLN)

0,92

1,80

0,22

Net cash flow from operating activity

106 115

80 565

25 018

Net cash flow from investment activity

(112 167)

(93 740)

(26 445)

Net cash flow from financial activity

(2 948)

(4 273)

(695)

Net change in cash and cash equivalents

(9 000)

(17 448)

(2 122)

as on 30.09.2013

as on 30.06.2013

as on 30.06.2013

Fixed assets

2 016 420

1 981 696

478 244

Working assets

1 392 792

1 430 773

330 335

Total assets

3 409 212

3 412 469

808 579

Long-term liabilities

230 361

237 364

54 636

Short-term liabilities

490 085

503 939

116 236

Own capital

2 688 766

2 671 166

637 707

CHOSEN UNCONSOLIDATED FINANCIAL DATA

 

 

 

Revenue from sales from continuing operations

780 918

807 625

184 114

Gross profit/(loss) from sales from continuing operations

103 589

119 063

24 423

Gross profit/(loss) from continuing operations

18 720

33 489

4 414

Net profit/(loss) from continuing operations

17 188

29 763

4 052

Total revenue in the period

17 066

29 663

4 024

Number of shares

19 115 000

19 115 000

19 115 000

Net profit/(loss) per one common share (in PLN/EUR)

0,89

1,55

0,21

Net cash flow from operating activity

116 789

31 025

27 535

Net cash flow from investment activity

(110 797)

(76 028)

(26 122)

Net cash flow from financial activity

(623)

(576)

(147)

Net change in cash and cash equivalents

5 369

(45 579)

1 266

as on 30.09.2013

as on 30.09.2013

as on 30.09.2013

Fixed assets

2 016 420

2 016 420

2 016 420

Working assets

1 276 679

1 308 618

302 796

Total assets

3 216 781

3 212 251

762 939

Long-term liabilities

156 018

158 068

37 003

Short-term liabilities

453 778

464 264

107 625

Own capital

2 606 985

2 589 919

618 311

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Good results of PUŁAWY

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On August 30th Grupa Azoty Zakłady Azotowe “PUŁAWY” published the financial results for Q4 and for the whole 2012/13 financial year. The results will bring satisfaction to all stakeholders due to the fact that they have confirmed and exceeded market expectations. The data for the whole year brought two records – the second largest net income in company history and the highest revenue from sales ever.

Quarterly financial results

The net profit of the Group reached 105.2 million PLN and was considerably higher that the market forecast of 92 million PLN. Operating income was 110.5 million PLN, while the revenue of the Group – at 930.2 million PLN – was slightly lower than in the previous quarter.

Excellent results were brought about by good profitability in the segments of fertilizers and energy. The chemical segment fell behind and produced a loss, mainly resulting from poor market for caprolactam.

Annual financial results

The net revenue of the Group was 392 million PLN, which is the second largest result in company history. At 3,684.5 million PLN, “PUŁAWY”‘s revenue has been the highest to date.

The Agro (agricultural) segment contributed the most to the success. This area of company activity produced 63.5% of overall revenue, namely 2,340.6 million PLN. Compared to the previous year, this sum has increased by 2,8 %. The Chemical segment comes second if share in revenue is considered, bringing 33,2% of revenue from sales or 1,223.3 million PLN.

Forecast for the future

It is the fertilizer market which looks the most promising in the foreseeable future. The prices are expected to remain at a similar level to the current one. Despite the low price of cereal on the market, which is a short-lived trend, the Agro segment is unlikely to suffer.

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The Minister of Treasury in Puławy

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Włodzimierz Karpiński, the Polish Minister of Treasury, visited “PUŁAWY” to attend the ceremony of completing the first stage of New Fertilizer Complex, an essential investment for our Works.

Finalizing investments in Puławy

During his visit in Puławy, the Minister participated in the opening ceremony of the most modern flue-gas desulfurization installation in Europe and the third flue-gas desulfurization installation using wet scrubbing with ammonia in the world; as well as two installations in New Fertilizer Complex – an installation for liquid fertilizers with sulfur PULASKA (190,000 tonnes per year), RSMS, and logistics center for granulated fertilizers. The total budget of the first stage of the investment was 360 million PLN.

The Minister stressed the fact that the finalized investments serve as a proof of good and wise management of “PUŁAWY”. In his opinion, such projects prove that the Company Board focuses on profitability.

Investments as the key to success

The Minister expressed strong approval of such consistent investment policy. In his view, new installations mean first of all new jobs and stability in the future. Mr. Karpiński believes that the investment projects finalized in Puławy confirm the strong position of Polish economy on a European as well as global scale.

During his visit in Puławy, the Minister emphasized the fact that such investment is invaluable in the time of economic downturn and crisis on the global markets.

Mr. Karpiński drew attention to the fact that building a new installation is not an art in itself, but making wise market analysis and launching investments responding to market needs is a true achievement. He believes that all projects in progress in Puławy respond to market demand and make the company more competitive internationally. They also improve the efficiency of production, thus bringing more revenue and higher profits.

The Minister of Treasury added that thanks to investments in “PUŁAWY”, experts in Western Europe have an excellent opinion about fertilizer-chemical sector and Grupa Azoty itself, which is the flagship of the Polish economy.

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The financial closing of Q4 in “PUŁAWY” proved…

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… a success! Despite the economic crisis, our enterprise can proudly announce a net profit of 87,5 million PLN produced during the final months of 2012. There have been a few factors which brought about such a result, the factors which are continually having an impact on our business activity.

“PUŁAWY” up and running

Undoubtedly, a major reason for the company’s prosperity on the nitrogen fertilizers’ market was the fact that numerous international competitors have suspended, limited or resigned from manufacturing this kind of products. Among issues which triggered such decisions were difficulties with natural gas supply, which only highlights the necessity to diversify our energy supply. Otherwise, our company’s operations may become disrupted due to external reasons.

The chemical sector

Increased prices of chemical products and improvement of EU balance of trade in this branch of business resulted in increased business confidence in the sector. Such signals always have a motivating influence on particular market participants, even if the production volume decreases slightly.

What about energy resources?

At the end of September and beginning of October 2012, new parliamentary bills were announced regarding electrical and natural gas energy acts and legislation on renewable energy sources in Poland. The bills would replace the currently binding Energy Act, which is no longer adequate with respect to actual market situation and current economic conditions. From the viewpoint of “PUŁAWY” Capital Group, positive changes in this respect will be crucial for our further development, mainly due to the fact that we are one of the largest consumers of natural gas in the country.

More than farming products

Although “PUŁAWY” is immediately associated with nitrates fertilizers, the company is also active in various other business sectors, such as construction, furniture manufacturing, textiles and plastics. Our involvement in those kinds of activity originates from the fact that we produce components for the manufacturing of laminates (melamine) or construction supplies (caprolactam). Consequently, business dealings with clients from the aforementioned sectors had a major impact on financial results in the fourth quarter. First and foremost, we ought to mention sales to Chinese partners, who are among main clients purchasing caprolactam. Thus, we are continually striving to uphold and strengthen our position on the Chinese market.

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Our comment on company results

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Public companies are now announcing annual financial results. As in “PUŁAWY” Group the financial year does not correspond to the calendar year, I have prepared a quick summary of 2012 on my own. It turns out that in this period “PUŁAWY” produced a net profit of 488 million PLN with annual revenue at 3,982 million PLN. The revenue from sales of products, goods and resources was 11% higher than in 2011.

How do we match up to the competition?

A comparison of company results with foreign enterprises from the sector is a humbling experience. Revenue of our company amounts to 8,5% of annual revenue of Yara, 10,7% of annual revenue of DSM and 21,0% of annual revenue of CF Industries. However, we may be satisfied about efficiency indicators, albeit slightly worse than in 2011. Return on Sales (ROS) of “PUŁAWY” in 2012 was 12% (as compared to 15% in 2011), but it was higher than in Yara Group (13% in 2012, 16% in 2011) and DSM (3% in 2012, 9% in 2011).

The best result was achieved by CF Industries with ROS at 32%, an increase from 29% in 2011. We ought to remember, however, that this American company has got access to natural gas which is four times less expensive that the price we pay in Poland.

In our company Return on Capital Employed (ROCE) was 19% in 2012. Yara’s ROCE was 17%, while in DSM this ratio stood at 5%.

For the first time in a long period, market value ratio exceeded the net worth of the company and reached 1,09.

The key to business efficiency

The results of the model of managing assets adopted in the company appear very effective. At the time when investors do not show much confidence in chemical sector companies from Central Eastern Europe, we are able to offer shareholders attractive return on investment as well as secure safe and good remuneration for our employees.

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