INVESTOR PRESENTATION June 2015 - Grupa...

INVESTOR PRESENTATION

June 2015

2

ONE OF MAJOR

EUROPEAN

CHEMICAL

PRODUCERS

NO. 1 IN POLAND

IN FERTILIZERS,

POLYAMIDES, OXO

PRODUCTS

MELAMINE, AND

TITANIUM WHITE

NO. 2 IN THE EU

IN MINERAL

FERTILIZERS

NO. 3 IN THE EU

IN COMPOUND

FERTILIZERS

GROWTH IN SCALE

THROUGH M&A

ACTIVITY

BALANCED

GEOGRAPHICAL

PRESENCE

EXPERIENCED

MANAGEMENT

TEAM

STABLE FINANCIAL

POSITION

LISTED ON THE

WARSAW STOCK

EXCHANGE SINCE

2008

GRUPA AZOTY IN

FTSE EMERGING

MARKETS AND

MSCI INDICES

CONTINUED

PRESENCE IN THE

RESPECT INDEX

GRUPA AZOTY AT A GLANCE


3

CORE BUSINESS



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 Sulfur

Grupa Azoty S.A. AN, CAN, ASN, AS, CPL, PA 6, POM

Compounding

AfriG S.A. Phosphorites

Grupa Azoty ZAK S.A. AN, CAN, Urea, OXO, Plasticizers

Z. A. Chorzów S.A. NPK, N, P, K

4

BROAD PORTFOLIO – 2014 REVENUES


AN,CAN, NPK, AS, ASN

UREA

UAN, AMMONIA

MINING: SULFUR, PHOSPHORITES

POLYAMIDE

CAPROLACTAM

OXO PRODUCTS

MELAMINE

TECHNICAL GRADE UREA

ELECTRICITY AND HEAT

LABORATORY SERVICES

CATALYSTS, OTHER ACTIVITY

15%

56%

25%

2%

2% Other

Plastics

Chemicals

Energy

Fertilizers - Agro


STRONG INTERNATIONAL POSITION

Almost 90% of revenues derived from sales to EU markets

5

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 January 19th 2013 Siarkopol from October 31st 2013

5 GRUPA AZOTY AT A GLANCE

BUSINESS

7

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

Anwil Ciech Synthos

LARGEST CHEMICAL COMPANIES IN POLAND based on 2014 revenues

FERTILIZERS

• No. 1 in compound fertilizers¹

• No. 1 in mineral fertilizers²

• No. 1 in fertilizers containing sulfur

• No. 1 in nitrogen fertilizers

FERTILIZERS

• No. 3 in compound fertilizers

• No. 2 in mineral fertilizers

PLASTICS, OXO, PIGMENTS, MELAMINE

• No. 1 in Polyamides

• No. 1 in OXO Alcohols and Plasticizers

• No. 1 in Titanium White

• No. 1 in Melamine

PLASTICS, OXO, MELAMINE

• No. 5 in Plasticizers

• No. 7 in OXO Alcohols

• No. 5 in Polyamide 6³

• No. 2 in Melamine

BUSINESS

GAS DIVERSIFICATION

Mallnow

Lasów

NATURAL GAS REQUIREMENT (BCM)

2014 Q12015

2.1 0.58

OTHER THAN FROM THE SYSTEM

2013 2014

25.4% 38.6%

Q12014 Q12015

22.1% 35.8%

8 BUSINESS

methane-rich natural gas (E),

nitrogen-rich natural gas (Lw), (Ls)

transit gas pipeline

local sources

15

17

19

21

23

25

27

29

31

EUR/MWh PGNiG Tariff Average natural gas price paid by the Group TTF DA* Source: ICIS

* Net of transmission costs

0 5 000 10 000 15 000 20 000

Azomures S.A.

Timac Agro (Groupe Roullier)

Achema JSC

Eurochem

Fertiberia

Borealis

Agrofert

Interagro*

(GK) Grupa Azoty

YARA

9

AGRO - FERTILIZERS

MANUFACTURER AS UREA AN CAN ASN UAN

AP/N

PK/

MIX

ACHEMA

AZOMURES

BASF

EuroChem

EUROCHEM

FERTIBERIA

GRUPA AZOTY

GROWHOW UK

NITROGENMUVEK

INTERAGRO

OCI NITROGEN

TIMAC AGRO

SKW PIESTERITZ

YARA

EXTENSIVE PORTFOLIO OF FERTILIZERS REVENUES

[tt]

CAPACITIES

eu

2

pOLAND

1

2013: 57%

2014: 55%

Source: Fertilizers Europe

*Interagro with partners

BUSINESS

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

10

PLASTICS

REVENUES

•Integrated

•Source: CMAI, 2012

[tt]

POLYAMIDE 6

Poland

1

Europe

5*

APPLICATIONS IN KEY SEGMENTS

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%

• Polyamide 6 (PA6)

• Polyacetal (POM)

• Caprolactam

• Cyclohexanone

BUSINESS

0 100 200 300 400 500

INEOS …

DEZA

Perstorp

Oltchim

OXEA

Grupa Azoty

Polynt

Evonik

BASF

Exxon Mobil

11

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

EU

5

REVENUES

2013: 24%

2014: 25%

[tt]

[tt]

[tt]

* Production capacities for phthalate plasticizers and terephthalate plasticizers

** Production capacities for 2-EH, N-butanol, isobutanol

Source: Plasticizers Alkohols 2013 and Plasticizers (UE) 2013

BUSINESS

Oxochimie (j.v. of Arkema

and INEOS)

INCREASING PRODUCTION CAPACITY

Planned 2014–2020 CAPEX of PLN 1.35bn

1,075 1,465 2,400*

2015 2016 2020

MECHANICAL GRANULATION

Improving the 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

12

* Assuming CAN is produced at Grupa Azoty PUŁAWY

BUSINESS

Exchange rate s as at June 30th 2015

• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

STRATEGY

Grupa Azoty is a long-term investment

generating real profits – its share price has

moved up by more than 295% since the IPO

Continuous development through organic

growth, operational excellence and M&A

activities

We launch new and invest in existing product

lines to enhance their efficiency and improve

production quality

We constantly enhance our product mix We extend product chains, tailoring our

products to customer requirements

We actively diversify our sources of key raw

materials to increase security of supplies

GRUPA AZOTY AT A GLANCE 14

WHY IS IT A GOOD IDEA TO INVEST IN GRUPA AZOTY?

DIVIDEND POLICY

The Management Board will

recommend to the General Meeting

dividend distributions of 40%-60% of

the Company’s net profit.

Dividend

for the

year

Net profit

(PLN '000)

Dividend amount

(PLN '000)

Dividend

per share

Payout

ratio

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%

The guiding principle behind Grupa Azoty’s dividend policy is to make

distributions proportionate to the Company’s earnings and financial

standing

Any decisions on dividend payment

will take account of a number of

factors concerning the Company and

the Grupa Azoty Group, including

business outlook, future profits, cash

requirements, financial standing,

growth plans, and legal

requirements.

15 GRUPA AZOTY AT A GLANCE


• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

STRATEGY 16

REMITS OF THE GRUPA AZOTY MANAGEMENT BOARD MEMBERS

President of the Management

Board

P. Jarczewski

Vice-President of the Management

Board

A. Skolmowski


Board

W. Szczypiński


Board

K. Jałosiński


Board

M. Kapłucha


Board

M. Rybak

Member of the Management

Board

A. Kopeć

Corporate Affairs and HR

Finance Tarnów Police Supply Chain Puławy Social Dialogue

Audit, Risks and Compliance

Planning and Controlling Plastics

Feedstock Supply Integration and

Maritime Logistics

Investments Technical Safety

and Environmental Protection

Communication IT Organic Synthesis

Strategy and Development

Logistics Support Services

Engineering Support Services

Infrastructure Services

Agro Business IR Production Integration

Energy Services Business Services

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 17

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 18

32%

PLN 7bn

2014−2020

CORPORATE

PROJECTS

68 CAPEX PROJECTS

11% 19% 30% 4% 2% 2%

PLASTICS ENERGY FERTILIZERS OXOPLASTS MELAMINE PIGMENTS

ORGANIC GROWTH


• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

STRATEGY 19

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

benefits 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 20

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

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


• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

FINANCIAL HIGHLIGHTS

22

REPORTED FINANCIAL DATA

2013 2014 Q1 2014 Q1 2015

Revenues 9,821 9,898 2,703 2,839

EBIT 703 302 183 363

EBITDA 1,253 822 322 485

Net profit 714 265 151 306

Equity 6,271 6,488 6,425 6,783

Net debt 627 527 463 154

PLNm

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Grupa Azoty S.A. Grupa Azoty ZAK Group Grupa Azoty POLICE Group Grupa Azoty PUŁAWY Group Other

STRUCTURE OF THE GROUP'S CONSOLIDATED REVENUES IN 2014



• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

PERFORMANCE BY SEGMENT

SEGMENT

(PLNm)

Revenues EBITDA

Q1

2014

Q1

2015

Q1

2014

Q1

2015

Agro Fertilizers 1,593 1,798 219 375

Plastics 375 340 -1 -2

Chemicals 651 609 67 54

Energy 51 58 16 26

Other 33 34 22 32

PRZYCHODY

23

EBITDA

NAJWAŻNIEJSZE DANE FINANSOWE

322 485

215 61 23 5 3 10 27 38

64

(PLNm)


• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

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) ↘

incl. 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)

24



• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

FINANCIAL HIGHLIGHTS 25

COST STRUCTURE

Pro-forma data, 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 materials and consumables

attributable to lower prices of energy

resources and petroleum raw materials, as well

as procurement synergies


• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

26

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*

* Consolidated data for Grupa Azoty S.A.

-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

IQ 2

015

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

IQ 2

015

EBITDA AND NET DEBT

Net debt EBITDA


UREA DAP NPK AS AN CAN RSM

Thousa

nd t

onnes

IMPORTS TO EU (28)

2013 Jan-Nov 2014 Source: EUROSTAT


• EUR 1 = PLN 4.1944

• USD 1 = PLN 3.7645

DISCLAIMER 27

DISCLAIMER

The information contained herein has been prepared by the Grupa Azoty Group (“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 invitation to subscribe for, or as a guarantee

of purchase or other acquisition of any securities of any of the Group companies. Neither this presentation nor any part hereof may form the basis of, or be

relied upon in connection with, any subscription for or acquisition of any securities of the Group companies. 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 any 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 discussion of various subjects in this Presentation may include forward-looking statements. Forward-looking statements are different from

statements of historical fact. They can be identified by the use of such words as "expect", "intend", "plan", "believe", "anticipate", "will", "aim", "can",

"would", "could", "continue" or similar expressions. 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 from the Company’s past performance and achievements. Forward-looking statements are made

based on various assumptions about future events, including 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. Unless

required by law, 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 a change to the Group’s strategy or plans or the occurrence of any facts or circumstances that will have an effect on the

Group’s strategy or plans. Please note that the only reliable source of data on the Group's and Group companies’ financial performance, as well as

forecasts, events and indicators relating to the Group and the Group companies, are the current and periodic reports released by the Group companies to

comply with the applicable disclosure requirements 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 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 on the market share of the Company and some

of its competitors. In each case the source of such information is provided, and such information has not been subject to independent verification by or on

behalf of the Group.

This Presentation is not for distribution to or use by any person or 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 an authorisation, 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]

http://www.grupaazoty.com/

mailto:[email protected]

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