INVESTOR PRESENTATION December 2019 Presentation 3Q 2019.pdf2Q 2019 -2Q 2020 selection of an...
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INVESTOR PRESENTATION December 2019
Transcript of INVESTOR PRESENTATION December 2019 Presentation 3Q 2019.pdf2Q 2019 -2Q 2020 selection of an...
INVESTOR PRESENTATION
December 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
I-IX 2019
PLNm
REVENUE 8 666
EBITDA
EBITDA adjusted*
1 257
1 333
EBITDA MARGIN 12,3%
NET PROFIT
NET PROFIT adjusted*
456
519
PLN 3.156bn*MARKET
CAPITALISATION
99,195,484 sharesSHARES
min/max price
6 PLN -113 PLN
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
*The Q3 2019 result was corrected for the effects of temporary shutdown
of the installation in Police, and 1-3Q 2019 the result was corrected
for write-downs on the subsidiary Chorzów and the effects of temporary
shutdown of the installation in Police.*data as of 28 November 2019
WIG-ESG
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%
23%
13%
2%
2%
GRUPA AZOTY AT A GLANCE
STRUCTURE OF REVENUE
Revenue 2018
AGRO FERTILIZERS
CHEMICALS
PLASTICS
ENERGY
OTHER
Revenue
I-IX 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
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
10 M&A
EFFECT OF AQUISITION OF COMPO EXPERT
RESULTS I-IX 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 103m
EBITDA MARGIN: 9%
REVENUE: PLN 1 202m
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, 2018
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
11 DEVELOPMENTS
Estimated synergies up to 2024
Use of Grupa Azoty's products as
raw materials for further processing
into specialityfertilizers at
COMPO EXPERT
Raw manerial
and product
synergies
Use of the Grupa Azoty Group' s and COMPO EXPERT' s
existing saleschannels
Sales
synergies
Cooperation
relating to know-
how for the
manufacture of
advanced
ferilizer products
Manufacturing
know-how
synergies
Combined
expertise,
experience and
capabilities; joint
R&D projects
R&D synergies
Raising debt
financing on more
favourable
market terms,
offered to the
Group
Financing
synergies
Total synergies to be realised at the Grupa Azoty Group and COMPO EXPERT by 2024 are estimated at EUR 40m.
* Total amount for Grupy Azoty and COMPO EXPERT
IT cost savings
thanks to joint
implementations
and services
IT synergies
40 mln EUR
OPERATIONS
13
61 15 8
155
GRUPA AZOTY GROUP – CONSOLIDATED FINANCIAL INFORMATION
GROUP’S BUSINESS BY GEOGRAPHY
Production
units
Sales representative
officesStabilisation unitsLogistics
2,927
142
834
206 118
14
Poland
49%
798 742958
7
625
EU
36%
North America
3%
3
4721
166
South America
3%
Africa
1%
8 696
Other Europe
4%
192
34 906
57
Asia
4%
144
1
185
WORLD
EUROPE
Grupa Azoty
Plastics
Chemicals
Energy
Compo Expert
Agro Fertilizers
JAN-SEP 2019 REVENUE
PLNm
46%
14%
13%
23%
2%2%
REVENUE ANALYSIS Jan-Sep 2019
Other
14 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
15
ENERGY COMMODITIES
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 Q3 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 Q3 2019
Hard coal ARA prices (USD/t)
CO2 [YOY]
2
7
12
17
22
27
Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019
EEX
EUR/t
0
20
40
60
80
100
120
140
1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019
PLN
/M
Wh
GPL * Gas - PPX*
GRUPA AZOTY GROUP – CONSOLIDATED FINANCIAL INFORMATION
Natural gas:
In Q3 2019, the downward trend in gas prices continued due
to:
record-high gas inventory levels,
lower prices of coal, a fuel competing with natural gas in
power generation,
oversupply of LNG on the global market with low LNG
prices on the Asian market.
CO2:
the model, implemented at the Group companies,
assuming purchases of emission allowances for two years
in advance, in appropriate volumes in line with the
adopted annual purchase plan
Change Q3 2019/Q3 2018
-3.6%ELECTRICITY
NOTE
Change Q3 2019/Q3 2018
-37%
Change Q3 2019/Q3 2018
22%
ChangeQ3 2019/Q3 2018
GPL* -59%
TGE* -55%
Gas supply sources:
- PGNiG – 97.6%
- Other – 2.4%*Excluding
transmission.
OUTLOOK
Natural gas:
In Q4 2019 and the next quarter, the usual seasonal growth
in gas prices is expected, depending on the temperature
and the pace of gas withdrawal; oversupply and price
declines similar to this year’s are expected over the
summer period.
17
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 5.191bn
EBITDA:
PLN 817m
EBITDA MARGIN:
16%
I-IX 2019RESULTS
18OPERATIONS
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 2.008bn
EBITDA:
PLN 209m
EBITDA MARGIN:
10%
I-IX 2019RESULTS
19
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 1.129bn
EBITDA:
PLN 84m
EBITDA MARGIN:
7%
I-IX 2019RESULTS
No. 3
in EU
No. 1
in Poland
INVESTMENTS
21 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
22 DEVELOPMENTS
Strategy for 2020-2030
decision of the Management
Board to appoint the
team
4Q 2019internalstrategicanalyses
2Q 2019 -
2Q 2020
selection of anexternaladviser
2Q 2020
work on draft strategy
2Q/3Q 2020
approval of the strategy by the Management
Board
3Q 2020 strategycommunication4Q 2020
1
2
Analyses:
forecasts for the markets for the current GA products
forecasts for the markets for new, more specialised GA products
product market forecasts for investment projects in progress (GA Polyolefins), planned investment
projects (R&D), and investment projects selected on the basis of cooperation with start-ups
forecasts of changes in Polish and European law, affecting technological and market position
technology development projections (for existing and tested technologies and those under
development)
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 Grupa Azoty Polyolefins 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 Grupa Azoty Polyolefins S.A.
Construction industry9% Food storage
packaging32%
Household products
27%Textiles
7%
Automotive15%
Industry10%
Source: Own study of Grupa Azoty PolyolefinsS.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
99,6
10
8,6
2016 2017 2018 I-IX 2019
(PLNbn)
1034 1262777
1333
11%
12%
8%
12,3%
2016 2017 2018 I-IX 2019
EBITDA EBITDA MARGIN
ADJUSTED EBITDA
FINANCIAL PERFORMANCE
RESULTS OF THE GRUPA AZOTY GROUP
REVENUE ADJUSTED NET PROFIT
(PLNm)
EBITDA BY SEGMENTS
541
484
82
817
301348
282
209
-28
221192
84
2016 2017 2018 I-IX 2019
AGRO FERTILIZERS CHEMICALS PLASTICS
(PLNm)(PLNm)
385
550
65
519
2016 2017 2018 I-IX 2019
32
44
316
-24
74
249 -22 25 17 -47
Q3 2018EBITDA
Sales volume* Sales prices Feedstockprices
CO2 Other CompoExpert
One-offevents**
Q3 2019EBITDA
GRUPA AZOTY GROUP – CONSOLIDATED FINANCIAL INFORMATION
EBITDA BRIDGE
positive effect on EBITDA
negative effect on EBITDA
PLNm
* Margin generated on sales volume.
573
1 257-39
475
293 -48 -24 103 -76
Q1-Q3 2018EBITDA
Sales volume* Sales prices Feedstockprices
CO2 Other CompoExpert
One-offevents**
Q1-Q3 2019EBITDA
KEY FACTORS
Lower gas prices
Higher sales prices of nitrogen and
compound fertilizers
COMPO EXPERT consolidation
Slowdown in the PLASTICS and
CHEMICALS segments
Higher prices of energy
commodities, phosphate rock and
potassium chloride
Ammonia Synthesis and Urea
Synthesis units stoppage
EBITDA
margin
12%
EBITDA
margin
15%
** Impairment losses relating to Zakłady Azotowe Chorzów (PLN -22m) and effect of temporary unit stopage at Zakłady Azotowe Police (PLN -54m).
33 GRUPA AZOTY – FINANCES
GRUPA AZOTY GROUP FINANCES AS AT SEPTEMBER 30TH 2019
• Revolving and umbrella credit facility
• PLN 3,878m
PKO and bank syndicate
• Term Loan Agreement
• PLN 650m
EBRD
• Term Loan Agreement
• PLN 1,111m
EIB
• PLN 5,639m
Total corporate financing
AVAILABLE FUNDING
Corporate credit facilities
Overdraft andmulti-purpose facilities
Other financing sources
0 1000 2000
PLNm
CORPORATE FINANCING
Total debt ratio 47.8%
PLNm
34
Thank you for your attention
For more information visit www.grupaazoty.com
Contact: [email protected]
