INVESTOR PRESENTATION March 2015 - Grupa Azoty

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


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



5

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 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


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


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)


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


• 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


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

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


• 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


• EUR 1 = PLN 4,2623

• USD 1 = PLN 3,5072

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


• 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 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


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]

http://www.grupaazoty.com/

mailto:[email protected]

INVESTOR PRESENTATION March 2015 - Grupa Azoty

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Transcript of INVESTOR PRESENTATION March 2015 - Grupa Azoty