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INVESTOR PRESENTATION
March 2015
AGENDA
2
GRUPA AZOTY AT A GLANCE
BUSINESS
INVESTMENT PROJECT
ECONOMY AND NATURAL GAS SECTOR IN POLAND
STRATEGY
FINANCIAL HIGHLIGHTS
EDUCATION AND SUPPORT
AGRICULTURE IN POLAND
GRUPA AZOTY AT A GLANCE
3
4
ONE OF MAJOR
EUROPEAN
CHEMICAL
PRODUCER
NO. 1 IN
FERTILIZERS,
POLYAMIDE,
OXO PRODUCTS
MELAMINE,
TITANIUM
WHITE IN
POLAND
NO. 2 IN
MINERAL
FERTILIZERS IN
THE EU
NO. 3 IN
COMPOUND
FERTILIZERS IN
THE EU
GROWTH IN
SCALE
THROUGH M&A
ACTIVITY
BALANCED
GEOGRAPHICAL
PRESENCE
EXPERIENCED
MANAGEMENT
TEAM
STABLE
FINANCIAL
POSITION
LISTED ON
WARSAW STOCK
EXCHANGE
SINCE 2008
GRUPA AZOTY
IN FTSE
EMERGING
MARKETS
CONTINUED
PRESENCE IN
THE RESPECT
INDEX
PRESENCE IN
THE MSCI
INDICES
GRUPA AZOTY AT A GLANCE
GRUPA AZOTY AT A GLANCE
5
CORE BUSINESS
GRUPA AZOTY AT A GLANCE
GRUPA AZOTY AT A GLANCE
Logistics
Production
ZMPP Port
Grupa Azoty Police Urea, NPK, NP, NS, Ammonia, TiO2
BBM Terminal
Fosfory NPK, P
Navitrans Logistics
Grupa Azoty
ATT Polymers PA 6
Grupa Azoty Puławy AN, UAN, Urea, Melamine, CPL
Grupa Azoty Siarkopol Sulphur
Grupa Azoty S.A. AN, CAN, ASN, AS, CPL, PA 6, POM
Compounding
Grupa Azoty „Folie”
sp. z o.o.
Grupa Azoty Compounding
sp. z o.o.
AfriG S.A. Phosphorites
Grupa Azoty ZAK S.A. AN, CAN, Urea, OXO, Plasticizers
Z. A. Chorzów S.A. NPK, N, P, K
6
WIDE PORTFOLIO – 2014 REVENUES
GRUPA AZOTY AT A GLANCE
AN,CAN, NPK, AS, ASN
UREA
UAN, AMMONIA
MINING : SULPHUR, PHOSPHATES
POLYAMIDE
CAPROLACTAM
OXO PRODUCTS
MELAMINE
UREA TECHNICAL GRADE
ELECTRICITY AND HEAT
LABORATORY SERVICES
CATALYSTS, OTHER ACTIVITY
15%
56%
25%
2%
2% Others
Plastics
Chemicals
Energy
Fertilizers - Agro
GRUPA AZOTY AT A GLANCE
STRONG INTERNATIONAL POSITION
Almost 90% of revenues derived from sales to EU markets
7
Poland
56%
-3%
20132
2014
South America
4%
-0,3%
Africa
1%
+1%
European Union1
32%
+2% Asia
6%
+0.04%
Non-EU
countries
2%
+0.4%
North America
1%
-0.5%
1 Excluding Poland
2 G.A. Puławy from 19th January 2013 , Siarkopol from October 31st 2013
7 GRUPA AZOTY AT A GLANCE
8
KEY DEVELOPMENTS IN 2014
GRUPA AZOTY PLACED ON THE LIST OF THE POLISH STATE TREASURY
STRATEGIC ENTERPRISES
GRUPA AZOTY REPRESENTED ON GOVERNING BODIES OF INTERNATIONAL
FERTILIZERS ASSOCIATION AND FERTILIZERS EUROPE
BUILDING OF THE VALUE OF GRUPA AZOTY – OPERATIONALIZATION OF
THE STRATEGY FOR 2014-2020
IMPLEMENTATION OF AN OPERATIONAL EXCELENCE PROGRAMME
KEY INVESTMENT PROJECTS:
• POLYAMIDE 6 PLANT
• GRANULATION PLANT II
• POWERPLANT - KĘDZIERZYN (I PART)
GRUPA AZOTY AT A GLANCE
the exchange rate as at Dec 31st 2014
• EUR 1 = PLN 4,2623
• USD 1 = PLN 3,5072
BUSINESS
BUSINESS 10
FERTILIZERS
• No. 1 in compound fertilizers¹
• No. 1 in mineral fertilizers²
• No. 1 in fertilizers containing sulphur
• No. 1 in nitrogen fertilizers
PLASTICS, OXO, PIGMENTS, MELAMINE
• No. 1 in Polyamide
• No. 1 in OXO Alcohols and Plasticizers
• No. 1 in Titanium White
• No. 1 in Melamine
FERTILIZERS
• No. 3 in compound fertilizers
• No. 2 in mineral fertilizers
PLASTICS, OXO, MELAMINE
• No. 5 in Plasticizers
• No. 7 in OXO Alcohols
• No. 5 in Polyamide 6³
• No. 2 in Melamine
Anwil Ciech Synthos
MAIN CHEMICAL COMPANIES IN POLAND
Notes: ¹ Compound fertilizers in total (AP, NPK, PK); ² Compound fertilizers + nitrogen fertilizers; ³ Among integrated producers
GRUPA AZOTY IS AN IMPORTANT PRODUCER IN THE REGION
GAS DIVERSIFICATION
Mallnow
Lasów
NATURAL GAS DEMAND (BCM)
2014 4Q2014
2,1 0,57
FROM OUTSIDE THE SYSTEM
2013 2014
25,4% 38,6%
4Q2013 4Q2014
18% 46,1%
11 BUSINESS
methane-rich natural gas (E),
high nitrogen natural gas (Lw), (Ls)
transit gas pipeline
local sources
6
8
10
12
USD/MBTU PGNiG Tariff Average natural gas price paid by the Group Heren TTF
Source: ICIS
ENERGY CONSUMPTION FOR AMMONIA PRODUCTION
12
36,8
32,7
33,4
34,7
33,4
30 31 32 33 34 35 36 37 38
GA ZCh Police S.A.
GA ZAK S.A.
GA S.A.
GA ZAP S.A. Ist line
GA ZAP S.A. IInd line
Net energy consumption (GJ/tNH3)
Grupa Azoty ZAK ~2,4 GJ/t
Grupa Azoty
PUŁAWY ~1GJ/t
Grupa Azoty S.A. ~1GJ/t
Grupa Azoty
Police ~2-2,5 GJ/t
Pla
ned o
pti
miz
ati
on
Based on the Fertilizers Europe
38,5 36,5 36
27
0
5
10
15
20
25
30
35
40
45
Russia Saudi Arabia Older instalation in Azoty Group
Planed optymization
New industrial plants
Theoretical efficiency
Energy consumption (GJ/tNH3)
28
-
29
30
-
33
-14 % -19 %
AMMONIA Total production capacity: 2.35 mt,
inclusive of captive use - about 90%
BUSINESS
BUSINESS 13
FERTILIZERS
MANUFACTURER AS UREA AN CAN ASN UAN
AP/NP
K/
MIX
ACHEMA
AZOMURES
BASF
EUROCHEM
FERTIBERIA
GRUPA AZOTY
GPN
GROWHOW UK
NITROGENMUVEK
OCI NITROGEN
SKW PIESTERITZ
YARA
EXTENSIVE PORTFOLIO OF FERTILIZERS REVENUES
Source: Fertilizer Europe
[tt]
CAPACITIES (JAN 2014)
EU
2
Poland
1
0 5 000 10 000 15 000 20 000
OCI Nitrogen
INA PETROKEMIJA
Eurochem (Antwerpen)
AZOMURES
ACHEMA
JSC Grodno Azot
(GK) FERTIBERIA
(GK) Borealis
(GK) Grupa Azoty
YARA
2013: 57%
Q3 2014: 55%
0 50 100 150 200 250
Others
Shchekino JSC Khim
JSC Khimvol. Amtel Kuzbas
Julon
JSC Kursk Khim.
Beaulieu-Nylon
Aquafil SpA Arco
JSC Grodno Khimvolokno
Grupa Azot
Radici Fibers SpA
Lanxess
DSM Eng. Plastics
Kubyshevazot Togliatti
DOMO (Xentrys)
BASF
BUSINESS 14
PLASTICS
REVENUES
* Integrated Source: CMAI, 2012
[tt]
POLYAMIDE 6
• Polyamide 6 (PA6)
• Polyacetal (POM)
• Caprolactam
• Cykloheksanon
Poland
1
Europe
5*
KEY SEGMENT APPLICATION
0 5 10 15 20 25 30 35 40
Automotive
Films and coatings
Machine building
Electrical and electronic applications
Consumer goods
Household appliances
Other
%
2013: 15%
2014: 15%
BUSINESS 15
CHEMICALS
0 100 200 300 400 500
Oltchim
Grupa Azoty
Perstorp
Oxochimie (j.v. Arkema i INEOS)
OXEA
BASF
Melamine
0 20 40 60 80 100 120 140 160
Azomures S.A.
Borealis Agrolinz Melamine GmbH
BASF SE
Borealis Agrolinz Melamine Deutschland GmbH
Grupa Azoty
OCI Melamine
OXO** Plasticizers *
Poland
1
EU
2
Poland
1
EU
5
Poland
1
0 100 200 300 400 500
INEOS …
DEZA
Perstorp
Oltchim
OXEA
Grupa Azoty
Polynt
Evonik
BASF
Exxon Mobil
EU
5
* Production capacities of phthalate plasticisers and terephthlate plasticisers
** Production capacities of 2-EH, N-butanol, isobutanol
Source: Plasticizers Alkohols 2013 i Plasticizers (UE) 2013
REVENUES
2013: 24%
2014: 25%
[tt]
[tt]
[tt]
INCREASING PRODUCTION CAPACITY
Planned 2014–2020 CAPEX of PLN 1.35bn
1,075 1,465 2,400*
2015 2016 2020
MECHANICAL GRANULATION
improving quality of nitrate fertilizers; expanding
fertilizer product mix
2,357 2,422 2,452
2015 2016 2020
AMMONIA PRODUCTION
Balancing ammonia production within the Group;
improving energy efficiency in ammonia production
1,165 1,265
0
2015 2016
RSM® – UREA AMMONIUM NITRATE SOLUTION
Increasing production capacity and expanding the
RSM® and RSM®S logistics network
345 355
0
2015 2016
PHOSPHORIC ACID PRODUCTION
Increasing production capacity; improving quality;
reducing phosphogypsum volumes
89 169
0
2015 2016
Polyamides
balancing caprolactam production within the Group
for internal polyamide production
15 50 0 0
2014 2015
OXOPLAST ® OT
increasing production capacity; expanding product
mix
16 Strategy implementation
* Considering CAN production in Grupa Azoty PUŁAWY
STRATEGY
18
WHY IS IT A GOOD IDEA TO INVEST IN GRUPA AZOTY?
Grupa Azoty is a long-term investment
generating real profits – its share price has
gone up by more than 295% since the IPO.
Dividend policy: the Management Board
will recommend to the General Meeting
dividend distributions between 40% and
60% of the Company’s separate net profit.
Constant development by organic growth,
operational excellence and mergers and
acquisitions.
We introduce new and invest in existing
product lines to boost their effectiveness
and improve production quality.
We constantly enhance our product mix. We extend product chains, tailoring our
products to meet customer requirements.
We actively diversify our sources of key
raw materials to increase the security of
supplies.
STRATEGY
the exchange rate as at Dec 31st 2014
• EUR 1 = PLN 4,2623
• USD 1 = PLN 3,5072
Dividend
for
the year
Net profit
(PLN '000)
Dividend
amount
(PLN '000)
Dividend
per share
% of net profit
allocated to
dividend
2008 61,935 39,899 PLN 1.02 64%
2012 250,692 148,793 PLN 1.50 59%
2013 44,117 19,839 PLN 0.20 45%
STRATEGY 19
REMITS OF THE GRUPA AZOTY MANAGEMENT BOARD MEMBERS
President of the Management
Board
P. Jarczewski
Vice-President of the Management
Board
A. Skolmowski
Vice-President of the Management
Board
W. Szczypiński
Vice-President of the Management
Board
K. Jałosiński
Vice-President of the Management
Board
M. Kapłucha
Vice-President of the Management
Board
M. Rybak
Member of the Management
Board
A. Kopeć
Corporate Affairs and HR
Finance Tarnów Police Supply chain Puławy Social dialogue
Auditing, risks and compliance
Planning and controlling Plastics
Feedstock Supply Integration and
Maritime Logistics
Investments Technical safety
and environmental protection
Communications IT Organic Synthesis
Strategy and development
Logistics support service
Engineering support service
Infrastructure service
Agro Business IR Production integration
Energy service Business service
VISION FOR GRUPA AZOTY
Organic
growth
Operational
excellence
Mergers
and
acquisitions
Grupa Azoty to remain one of the three leading players in
the European fertilizer market
Grupa Azoty to deliver industry-leading rates of return for
shareholders
STRATEGY 20
Grupa Azoty to join the blue-chip index of the Warsaw
Stock Exchange
STRATEGY
2020 ROCE ≥ 14%
2014−2020
PLN 7bn to be spent on organic
growth
Consolidating a top-three position
in fertilizer manufacturing
2020 EBIT MARGIN > 8%
2020 EBITDA MARGIN > 14%
CORPORATE OBJECTIVES
STRATEGY 21
32%
PLN 7bn
2014–2020
CORPORATE
PROJECTS
68 CAPEX PROJECTS
11% 19% 30% 4% 2% 2%
PLASTICS ENERGY FERTILIZERS OXOPLASTS MELAMINE PIGMENTS
ORGANIC GROWTH
the exchange rate as at Dec 31st 2014
• EUR 1 = PLN 4,2623
• USD 1 = PLN 3,5072
STRATEGY 22
Commitment
building
programme
Periodic
evaluation
system
Objective-based
incentive
system
Flexible
working hours
Operational
control
Process
output − APC
Cost of
Quality
TOP 60
White Energy
Best
practices for
generation
and
transmission
Best
practices for
energy use in
production
processes
KPIs in
repair/
overhaul
contracts
TPM
Preventive
maintenance
Optimisation
of outbound
logistics
Best
procurement
practices
across
categories
PRODUKCJA ENERGY
INTENSITY
REPAIRS AND
OVERHAULS
PROCUREMENT
AND LOGISTICS
SUPPORT
FUNCTIONS
OPERATIONAL EXCELLENCE
Purpose of the
Azoty PRO
scheme:
PLN 300m plus
in annual after
completion of
the project
PRODUCTION
• 100% interest in ATT Polymers GmbH
• 53% interest in ZAK 2010
1,3 1,4 1,2 1,9
5,3
7,1
9,8 9,9
2007 2008 2009 2010 2011 2012 2013 2014
STRATEGY 23
MERGERS AND ACQUISITIONS
Consolidated revenues PLN bn
• controlling interest in ZA Puławy (up to 95,98%)
• 85% interest in Siarkopol
• 55% interest in AIG, Senegal (GA Police)
2013
• 10.4% interest in ZA Puławy in the first
public tender offer
2012
2011 • 66% interest in ZCh Police
• 41% interest in ZAK
TARGET SELECTION PROCESS
Grupa Azoty
business tree
Start of analysis
1
ca. 2,000
entities
Long list of
potential targets
2
over 100 entities
Business segment
maps and matrices
3
over 50 entities
Short list of
potential targets
4
top 10 entities
Company profiles
5
ACQUISITIONS SINCE 2007
the exchange rate as at Dec 31st 2014
• EUR 1 = PLN 4,2623
• USD 1 = PLN 3,5072
FINANCIAL HIGHLIGHTS
0% 20% 40% 60% 80% 100% Grupa Azoty S.A. Grupa Azoty ZAK Group
Grupa Azoty POLICE Group Grupa Azoty PUŁAWY Group
FINANCIAL HIGHLIGHTS 25
REPORTED FINANCIAL DATA
2013 2014
Revenues 9,821 9,989
EBIT 698 302
EBITDA* 775 822
Net profit 709 265
Equity 6,630 6,781
Net debt 627 527
PLNm
SEGMENT
(PLNm)
REVENUES
2013
REVENUES
2014
EBITDA
2013
EBITDA
2014
Agro
Fertilizers 5,565 5,580 633 594
Plastics 1,467 1,460 -63 -34
Chemicals 2,385 2,506 71 86
Energy 266 195 69 80
Other 139 158 65 136
PERFORMANCE BY SEGMENT
EBITDA BRIDGE
* Adjusted
STRUCTURE OF THE GROUP'S
CONSOLIDATED REVENUES 2014
positive effect on EBITDA
negative effect on EBITDA
the exchange rate as at Dec 31st 2014
• EUR 1 = PLN 4,2623
• USD 1 = PLN 3,5072
1 246
775 862 822
471 527
419
80 6 0 15 84
241
605
40
0
200
400
600
800
1000
1200
1400
1600
1800
2000 PLNm
Ratios 2013 2014
Profitability ratios
EBIT margin (%) 1.8 3.1
EBITDA margin (%) 7.4 8.3
ROCE (%) 2.4 3.9
ROE (%) 11.3 4.1
Liquidity ratios
Current ratio 1.5 1.4
Debt ratios
Total debt ratio (%) 37.0 34.8
Net debt (PLNm) 627 527
Debt to equity ratio (%) 170.4 187.5
2013 2014 Change
Non-current
assets 6,630 6,781 2% ↗
Current
assets 3,321 3,167 (5) ↘
including cash
and cash
equivalents
713 559 (22) ↘
Total assets 9,951 9,948
GRUPA AZOTY GROUP: STATEMENT OF FINANCIAL POSITION
2013 2014 Change
Equity 6,271 6,488 3% ↗
Liabilities 3,680 3,460 -6% ↘
incl. borrowings 1,239 986 (20) ↘
other
financial
liabilities
101 100 -1% ↘
Total equity and
liabilities 9,951 9,948
(PLNm)
(PLNm)
26
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS 27
COST STRUCTURE
Data proforma, including Siarkopol's purchases from January 2012.
RAW MATERIALS
0
2 000
4 000
6 000
8 000
10 000
12 000
2013* 2014 Raw material and consumables used Services
Labour costs Depreciation and amortisation
Other
-4%
40%
9% 4% 5%
5%
7%
7%
23%
Natural gas
Propylene
Phosphate
Potassium salt
Phenol
Coal
Electricity
Other
Lower costs of raw material and
consumables attributable to lower prices of
energy resources and petroleum raw
materials, as well as procurement synergies
28
EXTERNAL FACTORS
PRICES
DAP AMMONIA UREA AS
2013
2014
4% 3%
-5%
- 14%
CPL PA6 BENZEN
2013
2014 + 1% +1%
0.3%
KEY RATIOS SINCE THE 2008 IPO -
QUARTERLY BASIS*
* Grupa Azoty Group
-100
0
100
200
300
400
500
-500
0
500
1 000
1 500
2 000
2 500
Q1 2
008
Q2 2
008
Q3 2
008
Q4 2
008
Q1 2
009
Q2 2
009
Q3 2
009
Q4 2
009
Q1 2
010
Q2 2
010
Q3 2
010
Q4 2
010
Q1 2
011
Q2 2
011
Q2 2
011
Q4 2
011
Q1 2
012
Q2 2
012
Q3 2
012
Q4 2
012
Q1 2
013
Q2 2
013
Q3 2
013
Q4 2
013
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
REVENUES AND NET PROFIT
Revenue Net profit
-200
0
200
400
600
800
Q1 2
008
Q2 2
008
Q3 2
008
Q4 2
008
Q1 2
009
Q2 2
009
Q3 2
009
Q4 2
009
Q1 2
010
Q2 2
010
Q3 2
010
Q4 2
010
Q1 2
011
Q2 2
011
Q2 2
011
Q4 2
011
Q1 2
012
Q2 2
012
Q3 2
012
Q4 2
012
Q1 2
013
Q2 2
013
Q3 2
013
Q4 2
013
Q1 2
014
Q2 2
014
Q3 2
014
Q4 2
014
EBITDA AND NET DEBT
Net debt EBITDA
FINANCIAL HIGHLIGHTS
UREA DAP NPK AS AN CAN RSM
Tys.
ton
IMPORT TO UE(28)
2013 Jan-Nov 2014 source: EUROSTAT
DISCLAIMER 29
DISCLAIMER
The information contained herein has been prepared by Grupa Azoty (“the Group”) solely for the purpose of presentation to investors (“the
Presentation”). By participating in the meeting at which this Presentation is given or by referring to this Presentation you agree to the restrictions and
disclaimers presented below.
This Presentation does not constitute or form any part of, and should not be considered as an offer to sell or as an offer to subscribe for, or as a purchase
guarantee to acquire in any other way, any securities of any of the Group companies. Neither this presentation nor any part thereof may form the basis of,
or be relied upon in connection with, any subscription for any securities of the Group companies, or their acquisition. Neither this Presentation nor any part
hereof may form the basis of or be relied upon in connection with any contract or commitment or investment decision relating to securities of the Group
companies. This presentation does not constitute a recommendation regarding any securities of the Group companies.
No statement or assurance, express or implied, has been made by or on behalf of the Group or any of its shareholders, members of its bodies, officers,
employees, agents or advisers or any other person as to the accuracy, completeness or reliability of the information or opinions contained in this
Presentation. The subjects discussed in this Presentation may constitute forward-looking statements. Forward-looking statements are different from
statements of historical fact. Statements containing such words as "expects", "intends", "plans", "believes", "anticipates", "will", "aims", "can", "would",
"could", "continues" or similar are determinants of such forward-looking statements. Forward-looking statements include statements about the financial
performance, business strategy, plans and objectives of the Group (including development plans relating to the Group). All forward-looking statements
contained in this Presentation relate to matters involving known and unknown risks, issues that are impossible to predict, and other factors. Actual results
and achievements of the Group may materially differ from those given in past declarations, and the Company’s past performance and achievements.
Forward-looking statements are made based on various assumptions about future events, including numerous assumptions regarding the current and future
business strategies of the Group and its future business environment. Although the Group believes that its estimates and assumptions are reasonable, they
may prove to be incorrect. The information, opinions and forward-looking statements contained herein are valid only on the date of this Presentation and
are subject to change without notice. The Group and its advisors are not obliged to publish any updates or modify any information, data or statements
contained in this Presentation in the event of change of the Group’s strategy or plans or in the event of changes in facts or circumstances that will have an
effect on the Group’s strategy or plans, unless such an obligation arises under law. Please note that the only reliable source of data on the Group's and
Group companies’ financial performance, forecasts, events and ratios are the current and periodic reports released by the Group companies as part of their
disclosure obligations under Polish law.
Neither the Group nor any of its shareholders, members of its bodies, officers, employees, agents or advisers nor any other person shall be liable for any
loss arising due to the use of this Presentation or its contents, or otherwise arising in connection with this Presentation.
Neither the Group nor any of its shareholders, members of its bodies, officers, employees, agents or advisers nor any other person is required to provide the
recipients of this Presentation with any additional information or to update this Presentation.
This Presentation contains information on the chemical industry in Poland and abroad, including information regarding the participation of the Company and
certain of its competitors in the market. The source of this information is always provided in this Presentation, and either the Group or other entity acting
on behalf of the Group has independently verified the information referred to above.
This Presentation is not for distribution to or use by any person or any entity in any jurisdiction where such distribution or use would be contrary to local
law or would oblige the Group or any of its affiliates to obtain authorization, license or exemption from the registration requirements under applicable
laws. Neither this Presentation nor any part hereof may be copied or transmitted into the United States, and cannot be disseminated, directly or indirectly
in the United States. Failure to comply with this restriction may constitute a violation of US securities laws. Persons who come into possession of this
Presentation should observe all the above limitations. Any securities referred to herein have not been and will not be registered under the US Securities Act
of 1933. Any such securities may not be offered or sold in the United States, except pursuant to an exemption or in a transaction not subject to the
registration requirements of the Act.
THANK YOU FOR YOUR ATTENTION
For more information visit www.grupaazoty.com
Contact: [email protected]