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INVESTOR PRESENTATION
September 2019
2
3 GRUPA AZOTY AT A GLANCE
GRUPA AZOTY GROUP
Grupa Azoty, Poland’s largest chemical group
and a significant chemical industry player in
the EU market, is one of the EU’s major
chemical producers offering a diversified
product portfolio – from mineral fertilizers
and engineering plastics through OXO
products to melamine.
Grupa Azoty Group’s consolidated revenue
EBITDA margin
Net profit
Consolidated EBITDA
9,999
764 adjusted 777
8%
8adjusted 65
CONSOLIDATED REVENUE FOR 2018 (PLNm)
Adjusted – net of one-off items
EU’s No. 2 in mineral fertilizers
EU’s No. 3 in PA6
4 locations of main production plants
60 group companies
approximately 15,000 employees
4 GRUPA AZOTY AT A GLANCE
KEY DATA
FINACIAL RESULTS
H1 2019
PLNm
REVENUE 6,103
EBITDA
EBITDA adjusted*
941
970
EBITDA MARGIN 16%
NET PROFIT
NET PROFIT adjusted*
395
420
PLN 3.7bn*MARKET
CAPITALISATION
99,195,484 sharesSHARES
min/max price
6 PLN -113 PLN
NET DEBT 2,460
NET DEBT/EBITDA 2.09 (ratio)
WSE: WIG30, mWIG40, WIG-CHEMIA, WIG30, mWIG 40,
WIG, WIG-Poland
STOCK
INFORMATION
FOREIGN INDEXES:
MSCI, FTSE, CEEplus
ESG: RESPECT INDEX/WIG-ESG,
FTSE4GOOD, MSCI ESG
* Data adjusted for one-off items*data as of 05 September, 2019
5
Productions plants
Fosfory
NPK
Grupa Azoty Puławy
N Fertilisers,
Melamine, Urea, CPL
Grupa Azoty Siarkopol
Sulphur
Grupa Azoty S.A.
Parent Company
PA6, Compounding,
NS Fertilisers
Z.A. Chorzów
NPK
Grupa Azoty
Kędzierzyn
N Fertilisers, Urea
OXO Products
Grupa Azoty
ATT Polymers
PA6
Compo Expert
Spain
Speciality Fertilisers
Compo Expert
Speciality Fertilisers
Grupa Azoty Police
NPK, Urea,
Ammonia, TiO2
GRUPA AZOTY AT A GLANCE
CORE BUSINESS
6
49%
31%
16%
2%2%
Fertilizers46%
Compo Expert
14%
24%13%
2%
1%
GRUPA AZOTY AT A GLANCE
STRUCTURE OF REVENUE
Revenue 2018
AGRO FERTILIZERS
CHEMICALS
PLASTICS
ENERGY
OTHER
Revenue
H1 2019
MERGERS & AQUISITIONS
8 M&A
CREATING VALUE FOR GRUPA AZOTY THROUGH ACQUISITIONS
• Puławy (up to 95.98%)
• Siarkopol (99.33%)
1.3 1.4 1.2
1.9
5.3
7.1
9.8 9.9 10.0
9.0
9.610.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
• Puławy (10.4%)
• Police (66%)
• Kędzierzyn (94%)
• ATT Polymers GmbH (100%)
• Kędzierzyn (53%)
CONSOLIDATED REVENUE (PLNbn)
8
• Transaction completed on
November 26th 2018
9 M&A
EFFECT OF AQUISITION OF COMPO EXPERT
RESULTS H1 2019
SYNERGIES
70 performance improvement initiatives identified,
mainly in procurement, production, technology,
and IT
Knowledge, capabilities and experience of the two
companies in R&D combined
Optimisation of the COMPO EXPERT Group
organisational structure
Fourfold reduction in corporate financing costs
Raw material and
product synergies
4.
Manufacturing
know-how synergies
1.
Sales synergies
2.
R&D synergies
3.
Financing
synergies
5.
EBITDA: PLN 86m
EBITDA MARGIN: 10%
REVENUE: PLN 868m
MAIN IDENTIFIED AREAS
SUBJECT:
100% of shares in the target company, COMPO EXPERT
acquired by Grupa Azoty from the seller, XIO Group, a
London-headquartered global alternative investments firm
DATE:
November 26, 2019
FINAL PURCHASE PRICE:
EUR 226,7m
STRATEGY:
The transaction complements Grupa Azoty’s strategy to
strengthen its domestic and international position among the
leading providers of agricultural solutions, by developing its
specialty fertilizers offering and seeking acquisition
opportunities in the region.
DETAILS OF TRANSACTION
10 M&A
ACQUISITION OF COMPO EXPERT
Fertigation
&
Foliar
SRF | CRF
Stabilized, granular NPK
Granular NPK (SOP based)
Granular NPK (MOP based)
UAN | ASN | CAN
AN | AS | DAP
Ammonia | Urea
Product portfolio of
Grupa Azoty
High-volume fertilizers
Basic fertilizers commonly used on
the market usually containing one or
two nutrients. In case of granular
NPK, they are based on potassium
chloride (MOP) and, thus, achieve
lower price than specialty fertilizers
Product portfolio of
COMPO EXPERT
Specialty fertilizers
Technologically advanced, agrochemical products with
higher value than high-volume fertilizers. Those products
are dedicated to high-value crops such as fruits,
vegetables, ornamental plants. Specialty fertilizers
achieve higher prices but offer for example extended
release time of nutrients. Certain specialty products can
be used for covered or greenhouse crops, as well as for
turfs. These products can be applied in the form of
homogenous granules or fertigation / foliar liquids. The
most advanced products allow the user to support the
plant development under the unfavorable growing
conditions and to improve quality parameters such as
color, fruit size, sugar content
Liquids &
Biostimulants
FERTILIZERS VALUE PYRAMID
OPERATIONS
12
48 12 7
85
GROUP’S BUSINESS BY GEOGRAPHY
Production unitsCommercial
representativesStabilisation unitsLogistics
2,053
100
578
126 77
9
Poland
48%
535 509700
5
481
UE
37%
North America
3%
3
3515
108
South America
2%
Africa
1%
8 464
Other Europe
5%
15525 70 1
47
Asia
4%
THE WORLD EUROPE
Grupa Azoty
Plastics
Chemicals
Energy
Compo Expert
Agro Fertilizers
H1 2019 REVENUEPLNm
OPERATIONS
105138
Other
13 OPERATIONS
FROM RAW MATERIAL TO PRODUCT GRUPA AZOTY GROUP
Natural gasOxygen Nitrogen
Methanol
Phenol
Benzene Sulfur
Ammonia
Nitric
acid
Ammonium
nitrate
(AN)
Calcium am
monium nit
rate (CAN)
Ammonium
sulfate nitra
te (ASN)
Ammonium
sulfate (AS)
Mixed acid
Caprolactam
PA 6
POM
Trioxane
Modified
plastics
C-non
Oleum
Dolomite
Syngas
and hydrogen
production
Formalin
Sulfuric
acid
IlmeniteTitanium
slag
Titanium
white
Phosphate
rock
Potassium
chloride
Phosphoric
acid
Fertilizers
NP
Fertilizers
NPK / PK
Adipic
acid
Terephthalic
acid
Plasticizers
OXO
alcohols
Urea
(UREA)Propylene
Aldehydes
Melamine
UAN
(UAN)
Raw materials – procurement
Plastics
OXO ALCOHOLS
Agro Fertilizers
Own production
Pigments
Pulaska
Liquid fertilizer
14
FEEDSTOCK CONSUMPTION BY GRUPA
AZOTY GROUP
IN 2018
FEEDSTOCK COST ANALYSIS
BUSINESS
Gas38%
Other18%
Energy9%
Propylene9%
Potassium chloride
7%Phenol
6%Phosphate rock
4%
Fine coal6%
Benzene3%
OPERATIONS
15
ENERGY COMMODITIES
NATURAL GAS
HARD COAL
PRICES [YOY]
PLN/MWh
USD/t
140
190
240
290
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
Electricity …
40
60
80
100
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
Hard coal…
CO2 [YOY]
2
7
12
17
22
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
EEX
EUR/t
40
60
80
100
120
140
sty 17 kwi 17 lip 17 paź 17 sty 18 kwi 18 lip 18 paź 18 sty 19 kwi 19
PLN
/M
Wh
GPL * Gas - PPX*
OPERATIONS
Q2 2019 on Q2 2018 change
12%
ELECTRICITY
GAS CONSUMPTION – Y2018
Q2 2019 on Q2 2018 change
-26%
Q2 2019 on Q2 2018 change
76%
Q2 2019 on Q2 2018 change
GPL* –37%
TGE* –33%
PGNiG – 96.4%
other – 3.6%
*Excluding
transmission
GAS SUPPLY SOURCES – H1 2019
TOTAL 201822,168 thousand
MWh
4,373
thousand MWh2,261
thousand MWh
10,917
thousand MWh
GRUPA AZOTY
POLICE
GRUPA AZOTY
KĘDZIERZYN
GRUPA AZOTY
PUŁAWY
GRUPA AZOTY
S.A.
4,617
thousand MWh
16
0 5 000 10 000 15 000
Azomures S.A.
Groupe Roullier
NitrogenmuvekRt.
Achema JSC
Fertiberia
Eurochem
Agrofert
Borealis
Grupa Azoty
Yara
[tt]
OPERATIONS
AGRO FERTILIZERS
PRODUCTION CAPACITIES
No. 2
in EU
No. 1
in Poland
TARGET MARKETS
Source: Fertilizers Europe
Poland73%
Other EU countries
21%
Other Europe3%
Asia0.3%
Africa0.3%
North America
1%South
America2%
Revenue:
PLN 4.9bn
EBITDA:
PLN 82m
EBITDA MARGIN:
2%
2018
Revenue:
PLN 3.7bn
EBITDA:
PLN 621m
EBITDA MARGIN:
17%
H1 2019RESULTS
17OPERATIONS
PLASTICIZERS
0 100 200 300 400 500
Valtris
Perstorp OXO AB
Deza
Grupa Azoty
Polynt
Evonik
BASF
ExxonMobil
0 200 400 600
Oltchim SA
Perstorp OXO
Grupa Azoty
Ineos
Oxea Group
BASF
OXO ALCOHOLS MELAMINE
0 50 100 150 200
Azomures S.A.
BASF SE
Grupa Azoty
Borealis Group
OCI Melamine
PR
OD
UC
TIO
N
CA
PA
CIT
IES
No. 3
in EU No. 5
in EU
No. 4
in EU
OXO alcohols
20%Plasticizers
8%
Urea (technical grade)
21%
Melamine17%
Titanium white13%
Other 21%
PRODUCT CATEGORIES
CHEMICALS
Revenue:
PLN 3.1bn
EBITDA:
PLN 282m
EBITDA MARGIN:
9%
2018
Revenue:
PLN 1.4bn
EBITDA:
PLN 167m
EBITDA MARGIN:
12%
H1 2019RESULTS
18
OPERATIONS
PLASTICS
Poland 12%
Other EU countries
68%
Other Europe
2%
Asia14%
Africa1%
North America
2%
South America
1%
PRODUCTION CAPACITIES
POLYAMIDE 6
0 50 100 150 200 250 300
Nurel
Beaulieu
Rhodia
Ube
Domo
Radici
DSM
Aquafil
Grupa Azoty
Lanxess
BASF
Source: PCI Nylon, YellowBook 2018
Integrated
Revenue:
PLN 1.6bn
EBITDA:
PLN 192m
EBITDA MARGIN:
12%
2018
Revenue:
PLN 791m
EBITDA:
PLN 81m
EBITDA MARGIN:
10%
H1 2019RESULTS
No. 3
in EU
No. 1
in Poland
INVESTMENTS
20 STRATEGY
STRATEGIC DIRECTIONS
Our mission
Complete the Group
consolidation process
1.
Reinforce leadership
in agricultural
solutions in Europe
2.
Create value for the Company and the
national economy by delivering safe,
useful and innovation-driven chemical
products
Our vision
Strengthen the second
operating pillar by
expanding the non-
fertilizer business3.
Develop and
implement innovations
to drive growth of the
chemical industry4.
Deploy state-of-the-art and
comprehensive chemical industry
solutions that meet stakeholder
expectations
21 GRUPA AZOTY – INVESTMENTS
INVESTMENTS
CAPEX PROJECTS IN H1 2019
including:CAPEX in
(PLNm)
GROWTH CAPEX 202
MAINTENANCE CAPEX 60
MANDATORY CAPEX 22
PURCHASE OF FINISHED GOODS 30
OTHER (COMPONENTS, MAJOR
OVERHAULS)73
TOTAL 387
CONSOLIDATED CAPEX – CASH FLOW 439
2019 CAPEX* ≈ PLN 1.3BN
*Excluding equity investments
PLNm
0
50
100
150
200
Tarnów
0
50
100
150
200
GK Police
0
50
100
150
200
GK Kędzierzyn
0
50
100
150
200
GK Puławy
CAPITAL EXPENDITURE IN H1 2019
22 GRUPA AZOTY – INVESTMENTS
MAJOR CAPEX PROJECTS IN 2019
Plan 2019
Components Other
Purchase of finished goods Mandatory capex
Maintenance capex Growth capex
Project name Company
Project
budget in
2019
Completion
date
Upgrade of steam generator to reduce NOx emissions Puławy PLN 42.5m 2020
Upgrade of synthesis gas compression unit supplying
Ammonia PlantKędzierzyn PLN 38m 2020
Raw gas compressor (GHH) Kędzierzyn PLN 12.8m 2019
Construction of new draft cooling tower for Lactam
Department Tarnów
PLN 10.1m2020
Replacement of fertilizer drying unit 311Y PN-2 Police PLN 9.5m 2020
Upgrade of existing nitric acid production units and
construction of new nitric acid production and
neutralisation units and units for production of new
fertilizers based on nitric acid
Puławy PLN 147.8 2024
Modified Plastics Plant Compounding PLN 83.4m 2019
Power generation unit Puławy PLN 81m 2022
Facility for production of granulated fertilizers based
on ammonium nitratePuławy PLN 69m 2020
Construction of turbo generator set using steam from
Sulfuric Acid Unit and Dual-Pressure Nitric Acid Unit,
and 4 MPa steam pipeline from Sulfuric Acid Unit to
Dual-Pressure Nitric Acid Unit
Tarnów PLN 15m 2020
Chemical Technology and Development Centre Tarnów PLN 14m 2019
Adaptation of continuous FDO unit for periodic
production of OxoviflexKędzierzyn PLN 10m 2019
Installation of second polyamide 6 surface
modification line Tarnów PLN 10m 2020
23
POLIMERY POLICE
PROJECT SCOPE:
- PDH-PP plant
- polypropylene logistics base
- propane and ethylene handling & storage terminal
Production capacity
– propylene 429,000 tonnes/year
- polypropylene 437,000 tonnes/year
Project finance
Location: within the Pomeranian Special Economic Zone
(state aid of up to PLN 428m)
Budgeted cost of the project: EUR 1.52bn
CAPEX EUR 1.18bn
Hyunday Engineering Co. Ltd as the General Contractor
PROJECT’S KEY BENEFITS:
Diversification of revenue streams, additional profits for the Grupa Azoty Group, expansion of
the product portfolio, flattening of business cycles
23
MAIN PROJECTS IN PROGRESS
•Full Notice to Proceed (FNTP)
Q4 2019
•Start of construction by
the General Contractor
Q1 2020
•Test run of the PDH-PP plant
Q2 2022
•Start of commercial operation
Q4 2022
PROJECT SCHEDULE
24 MAIN PROJECTS IN PROGRESS
POLIMERY POLICE
PRODUCTION CAPACITIES
Production forecast for polypropylene after 2022
(tt./year) - internal estimates of PDH Polska S.A. based
on data provided by Eurostat
0 500 1000 1500 2000 2500
Belgium
Germany
France
Spain
Italy
Netherland
Hungaria
Czech Republic
Poland
Slovakia
UK
Finland
Bulgaria
Romania
+437 tt. from PDH Polska S.A.
Construction industry9% Food storage
packaging32%
Household products
27%Textiles
7%
Automotive15%
Industry10%
Source: Own study of PDH Polska S.A. based on data from the
Annual Report 2017 of the PlasticsEurope Polska Foundation
SALE OF POLYPROPYLENE BY END CUSTOMER
PLANTS LOCALISATION
POLIMERY POLICE
25
Investors
(Equity) at the
PDH level
Financial
Institutions
(Debt)
MAIN PROJECTS IN PROGRESS
FINANCIAL STRUCTURE OF THE POLIMERY POLICE PROJECT
Equity capital
Debt financing
Equity financing
Debt financing
BUDGET (approx. EUR 1.52 billion): Investment outlays are approx. EUR 1.18 billion,
Other outlays, including those resulting from the
project finance formula (approx. EUR 0.34 billion)
include:
• provision for investment outlays,
• financing costs during the construction period,
• debt service reserve account,
• operating costs of PDH Polska during the
construction period.
Equity Capital: The current, estimated share of financing with
equity in the budget of the Project is about 40%,
Planned acquiring additional funds from investors
at the level of Grupa Azoty Zakłady Chemiczne
Police S.A. under the planned SPO and directly at
the project level,
Acquiring equity from foreign investors, including:
HEC, KIND, Lotos S.A.,
Contract signing with investors planned for 4Q
2019
Debt financing (approx. 60% of the Project
Budget) Senior "debt financing" in the project finance
formula,
It is planned to receive binding offers for debt
financing in Q4 2019
Additional working capital in the amount of
approx. EUR 176 million.
POTENTIAL INVESTORS
26
26
MODIFIED PLASTICS PLANT – COMPOUNDING
PORTFOLIO
Caprolactam
intermediate in
polyamide 6 (PA6)
production
Natural engineering
plastics:
PA6, POM
Modified plastics:
PA 6, PA66, POM, PPC,
PPH , PBT
MAIN PROJECTS IN PROGRESS
PROJECT SCOPE:
Construction of plastics modification unit
Project implemented within a Special
Economic Zone
Location: Tarnów
Target production capacity: 46tt
Project budget: PLN 115m
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
27
NITRATE GRANULATION PLANT
PRODUCTSPROJECT SCOPE:
Plant for production of ammonium nitrate-based granulated
fertilizers 385,000
The plant’s daily production capacity:
1,400 tonnes of CAN
or
1,200 tonnes of mechanically granulated nitrate
Project completion timeframe: 2015 – 2020
Location: Puławy
Capital expenditure: PLN 385m
PROJECT’S KEY BENEFITS:
Improved quality of fertilizers by applying modern mechanical granulation
27
MAIN PROJECTS IN PROGRESS
Calcium ammonium nitrate
(CAN)
Granulated ammonium nitrate
28
NITRIC ACID AND NEUTRALISATION UNITS
MAIN PROJECTS IN PROGRESS
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, electricity
29
POWER GENERATION UNIT
MAIN PROJECTS IN PROGRESS
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 supplies
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
FINANCIAL PERFORMANCE
31
385
550
65
420
2016 2017 2018 H1 2019
(PLNbn)9
9,610
6,1
2016 2017 2018 H1 2019
1034 1262777
970
11%
12%
8%
15%
2016 2017 2018 H1 2019
EBITDA EBITDA MARGIN
ADJUSTED EBITDA
FINANCIAL PERFORMANCE
RESULTS OF THE GRUPA AZOTY GROUP
REVENUE ADJUSTED NET PROFIT
(PLNm)
EBITDA BY SEGMENTS
541484
82
621
301348
282
167
-28
221192
81
2016 2017 2018 H1 2019
AGRO FERTILIZERS CHEMICALS PLASTICS
(PLNm)(PLNm)
32 FINANCIAL PERFORMANCE
EBITDA BRIDGE
positive effect on EBITDA
negative effect on EBITDA
PLNm
PLN -52m coal/energy
PLN -34m potassium chloride
PLN -26m phosphate rock
PLN -15m propylene
* Margin generated on sales volume.
PLN +175m natural gas
529
941
-5
399 43 -25 -57 86 -29
EBITDAH1 2018
Sales volume* Selling prices Prices of rawmaterials
CO2 Other Compo Expert One-offevents**
EBITDAH1 2019
KEY FACTORS
** Impairment losses in subsidiary Zakłady Azotowe Chorzów (PLN -22m) and temporary plant outage in Police (PLN -7m).
Y2018/2017
H1 2019/2018
1,187
764
7542
420 827
77 41 13
EBITDA 2017 Sales volume Selling prices Prices of rawmaterials
CO2 Other EBITDA 2018
PLN -35melectricity prices
PLN –68mprices of hard coal
PLN –508mgas prices
PLN -77mCO2 prices
PLN -25m CO2 prices
33 FINANCIAL PERFORMANCE
GRUPA AZOTY GROUP FINANCES AS AT JUNE 30TH 2019
Total debt ratio (%)
47.3
NET DEBT BRIDGE
576
2,4601,520
1,080 1,176 131405
76
Net debt H1 2018 Purchase + refinancing of Compo’s debt
Capitalexpenditure
EBITDA Dividend balance Recognition ofoperating leases
Other Net debt H1 2019
NET DEBT H1 2018 1H 2019
Net debt (PLNm) 576 2,460
Net debt/EBITDA
for 12 months (ratio)0.58 2.09
34 FINANCIAL PERFORMANCE
GRUPA AZOTY GROUP FINANCES AS AT JUNE 30TH 2019
• Revolving and umbrella credit facility
• PLN 3,869m
PKO and bank syndicate
• Term Loan Agreement
• PLN 650m
EBRD
• Term Loan Agreement
• PLN 1,119m
EIB
• PLN 5,638m
Total corporate financing
AVAILABLE FUNDING
Corporate credit facilities
2,353
Overdraft and multi-purpose facilities
846
Other financing sources
52
PLNm
35
Thank you for your attention
For more information visit www.grupaazoty.com
Contact: [email protected]