INVESTOR PRESENTATION Q3 2014

Transcription

1 INVESTOR PRESENTATION Q3 2014

2 GRUPA AZOTY AT A GLANCE 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 STABLE FINANCIAL POSITION EXPERIENCED MANAGEMENT TEAM LISTED ON WARSAW STOCK EXCHANGE SINCE 2008 CONTINUED PRESENCE IN THE RESPECT INDEX PRESENCE IN THE MSCI INDICES GRUPA AZOTY AT A GLANCE 2

3 GRUPA AZOTY AT A GLANCE ONE OF THE BIGGEST EMPLOYERS IN THE REGION LEVEL OF EMPLOYMENT AT THE END OF 2013: 13,879 PEOPLE AfriG S.A. Phosphorites CORE BUSINESS Grupa Azoty POLICE Urea NPK, NP, NS Ammonia TiO 2 Grupa Azoty ATT Polymers PA 6 Grupa Azoty ZAK S.A. AN, CAN Urea OXO Alcohols Plasticizers ZMPP Port Z.A. Chorzów S.A. NPK, N, P, K Logistics Production BBM Terminal Grupa Azoty Compounding Sp. z o.o. Fosfory NPK, P Navitrans Logistics Grupa Azoty Folie Sp. z o.o. 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 AT A GLANCE 3

4 GRUPA AZOTY AT A GLANCE WIDE PORTFOLIO 2013 REVENUES Fertilizers - Agro Plastics 57% 15% AN,CAN, NPK, AS, ASN UREA UAN, AMMONIA MINING : SULPHUR, PHOSPHATES POLYAMIDE CAPROLACTAM Chemicals Energy 24% 3% OXO PRODUCTS MELAMINE UREA TECHNICAL GRADE ELECTRICITY AND HEAT Others 1% LABORATORY SERVICES CATALYSTS, OTHER ACTIVITY GRUPA AZOTY AT A GLANCE 4

5 GRUPA AZOTY AT A GLANCE STRUCTURE OF GRUPA AZOTY 66% Grupa Azoty S.A. 85% 100% Grupa Azoty POLICE Grupa Azoty Siarkopol S.A % Grupa Azoty ATT Polymers GmbH Grupa Azoty ZAK S.A. 100% 63.27% Grupa Azoty KOLTAR Sp. z o.o. 100% 95.98% 100% Grupa Azoty PKCh Sp. z o.o. Grupa Azoty Folie Sp. z o.o. Grupa Azoty PUŁAWY Grupa Azoty Compounding Sp. z o.o. SHAREHOLDERS STRUCTURE State Treasury; 33,00% ING OFE (Pension Fund); 9,96% TFI PZU S.A. (Investment Fund); 8,76% EBRD; 5,75% Norica Holding S.à.r.l.; 10,10% Rainbee Holdings Limited*; 9,90% Others; 22,53% * company directly controlled by Norica Holding S.à r.l. GRUPA AZOTY AT A GLANCE 5 Norica Holding S.à r.l %

6 STRONG INTERNATIONAL POSITION Almost 90% of revenues derived from sales to EU markets % % North America 1% +0.1% European Union 1 32% -5% Non-EU countries 1% -1% Asia 5% +2% Other Asia EU 1 Poland 56% +5% South America 3% -0,2% Africa 1% -1% Poland Excluding Poland 2 Data for 2012 excluding G.A. Puławy, Siarkopol from October 31st Jan-Sep 2014 GRUPA AZOTY AT A GLANCE 6

7 KEY DEVELOPMENTS IN 2014 VALUE CREATION MODEL BASED ON THE STRATEGY FOR GRUPA AZOTY REPRESENTED ON GOVERNING BODIES OF IFA KEY INVESTMENT PROJECTS: POLYAMIDE 6 PLANT GRANULATION PLANT II POWERPLANT - KĘDZIERZYN (I PART) DIVIDEND PAYMENT OF PLN 19,839, (PLN 0.20 PER SHARE) GRUPA AZOTY PLACED ON THE LIST OF STRATEGIC ENTERPRISES OF THE STATE TREASURY the exchange rate as at Dec 1st 2014 EUR 1 = PLN USD 1 = PLN GRUPA AZOTY AT A GLANCE 7

8 BUSINESS

9 GRUPA AZOTY IS AN IMPORTANT PRODUCER IN THE REGION 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 MAIN CHEMICAL COMPANIES IN POLAND Anwil Ciech Synthos Consolidated revenues in 2013 (PLN bn) Notes: ¹ Compound fertilizers in total (AP, NPK, PK); ² Compound fertilizers + nitrogen fertilizers; ³ Among integrated producers BUSINESS 9

10 2014 FACTORS GEOPOLITICAL FACTORS EC-imposed duties on Russian ammonium nitrate, pure and mixed, at EUR /tonne over five years Grupa Azoty placed on the list of the Treasury's strategic enterprises Tightening of measures to protect EU markets in 2014, with the number of countries enjoying duty preferences down from 178 to 88 (6.5% tariff and import restrictions) BUSINESS ENVIRONMENT Relatively stable polyamide 6 prices, with adjustments to accommodate pressures from declining raw material prices Depressed demand for titanium white and melamine Oil prices down approximately 14% Continued appreciation of USD against EUR and PLN COMPETITION Plans to increase NPK fertilizer and calcium nitrate manufacturing capacities in 2017 announced by a European fertilizer manufacturer Increase in offshore acquisitions by EU-based manufacturers, e.g. in South America Restarting of OXO alcohol unit in September by rival OXO manufacturer, with price-competitive 2-EH offering launched on Italian and Polish markets. Production resumed by another competitor in the sector following industrial failure in August GRUPA AZOTY The Operational Excellence Programme (Azoty PRO) one of the three main pillars of the Azoty Group's strategy until 2020 Incorporation of subsidiary, Grupa Azoty AFRICA S.A. of Dakar (Senegal), by Grupa Azoty POLICE Acquisition of Unibaltic Agro Sp. z o.o. by Agrochem Puławy Sp. z o.o. (subsidiary of Grupa Azoty PUŁAWY) BUSINESS 10

11 FEEDSTOCK: GAS AND ELECTRICITY MAIN RAW MATERIALS HISTORICAL COST DISADVANTAGE VS. NEIGHBOURING EU MARKETS 100% ELECTRICITY PRICES (PLN/MWH) 90% Other % 70% Electricity Coal Q 20122Q 20123Q 20124Q 20121Q 20132Q 20133Q 20134Q 20131Q 20142Q 20143Q 2014 Average-weighted index BASE for RDN 60% 50% Phenol 12 NATURAL GAS PRICES(USD/MBTU) 40% 30% Potassium salt Phosphate 10 20% Propylene 8 10% Natural gas 0% Data proforma, including the PUŁAWY Group's and Siarkopol's purchases from January PGNiG Tariff Average natural gas price paid by the Group Heren TTF Source: ICIS. BUSINESS 11

12 GAS SOURCES OF SUPPLY GAS DIVERSIFICATION NATURAL GAS DEMAND Natural gas demand (bcm) 2014 Q1-Q Q From outside the system Q1-Q Q1-Q % 36% Q Q % 60% AMMONIA Total production capacity: 2.24 mt, inclusive of captive use - about 90% PRODUCTION SURPLUS GA POLICE I GA ZAK S.A. PRODUCTION DEFICIENCY - TARNÓW TOTAL DEMAND OF TARNÓW COVERED WITH SUPPLIES WITHIN GRUPA AZOTY THE REMAINING SURPLUS OF AMMONIA SOLD IN THE EXTERNAL MARKET methane-rich natural gas (E), high nitrogen natural gas (Lw), (Ls) transit gas pipeline local sources BUSINESS 12

13 FERTILIZERS REVENUES 2013: 57% EXTENSIVE PORTFOLIO OF FERTILIZERS MANUFACTURER AS UREA AN CAN ASN UAN AP/NP K/ MIX ACHEMA AZOMURES BASF Q3 2014: 55% EUROCHEM CAPACITIES (JAN 2014) FERTIBERIA YARA GRUPA AZOTY (GK) Grupa Azoty (GK) Borealis GPN (GK) FERTIBERIA Poland GROWHOW UK JSC Grodno Azot 1 ACHEMA NITROGENMUVEK AZOMURES EU OCI NITROGEN Eurochem (Antwerpen) INA PETROKEMIJA 2 SKW PIESTERITZ OCI Nitrogen YARA [tt] Source: Fertilizer Europe BUSINESS 13

14 PLASTICS REVENUES Polyamide 6 (PA6) Polyacetal (POM) Q3 2014: 14% Caprolactam Cykloheksanon 2013: 15% POLYAMIDE 6 BASF DOMO (Xentrys) Kubyshevazot Togliatti DSM Eng. Plastics Lanxess Radici Fibers SpA Grupa Azot JSC Grodno Khimvolokno Aquafil SpA Arco Beaulieu-Nylon JSC Kursk Khim. Julon JSC Khimvol. Amtel Kuzbas Shchekino JSC Khim Others [tt] Poland 1 Europe 5* KEY SEGMENT APPLICATION Other Household appliances Consumer goods Electrical and electronic applications Machine building Films and coatings Automotive % * Integrated Source: CMAI, 2012 BUSINESS 14

15 CHEMICALS REVENUES 2013: 24% Q3 2014: 26% Melamine OCI Melamine Grupa Azoty Borealis Agrolinz Melamine Deutschland GmbH BASF SE Borealis Agrolinz Melamine GmbH Azomures S.A. Poland 1 EU 2 Plasticizers * OXO** [tt] Exxon Mobil BASF Evonik Polynt Grupa Azoty Poland 1 BASF OXEA Oxochimie (j.v. Arkema i INEOS) Poland 1 OXEA Oltchim Perstorp DEZA INEOS [tt] EU Perstorp Grupa Azoty Oltchim [tt] 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 BUSINESS 15

16 CAPITAL EXPENDITURES 2013 EXPENSES INCURRED IN 2013 PLNm Fertilizers Liquid and solid fertilizers based on UREA and AS Puławy Ammonia new ammonia storage facility (Puławy) and upgrade of reactors (Tarnów, Police) 243 Plastics Sulphuric acid upgrade C-none capacity increase and cost reduction Tarnów 80 Chemicals Oxo products terephthalate (Kędzierzyn) and fat processing plant (Chorzów) 66 Other activities Energy flue gas desulphurisation units in Puławy and Police (ammonia scrubbing AS by-product) 277 the exchange rate as at Dec 1st 2014 EUR 1 = PLN USD 1 = PLN BUSINESS 16

17 MARKET OUTLOOK Fertilizers Large contracts for urea supplies from India, Pakistan and other Asian countries and the renewal of customs duties on urea in China will result in global urea shortages in Q4 2014, which may drive the price of nitrogen fertilisers up towards the end of the year Rise in nitrate fertilizer prices forecast for Q Farmers likely to postpone fertilizer re-stocking from Q to Q due to an anticipated rease in agricultural produce prices in Q Plastics The situation on the target markets likely to trail general economic conditions and GDP growth, which will coincide with year-end effect The situation in the European automotive industry improved in 2014, with the number of new vehicle registrations up by over 6% on 2013 Chemicals Potential pressure on OXO prices attributable to lower raw material prices Anticipated increase in melamine prices as on limited supply in Q Sulfur market remains stable, with no price increases expected in Q Continued weak demand for titanium white in Q may reverse in Q Raw materials Oil prices were down in Q3 2014, to their 4-year low in mid-october Following the decline in crude oil prices, petroleum product prices are also down in Q4 2014, with the price of benzene estimated at less than EUR 1,000/tonne With methanol duties lifted across the board, the feedstock is likely to be easier and less expensive to obtain BUSINESS 17

18 STRATEGY

19 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 270% since the IPO. Constant development by organic growth, operational excellence and mergers and acquisitions. We actively diversify our sources of key raw materials to increase the security of supplies. 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. Dividend policy: the Management Board will recommend to the General Meeting dividend distributions between 40% and 60% of the Company s separate net profit. Dividend for the year Net profit (PLN '000) Dividend amount (PLN '000) Dividend per share % of net profit allocated to dividend ,935 39,899 PLN % , ,793 PLN % ,117 19,839 PLN % the exchange rate as at Dec 1st 2014 EUR 1 = PLN USD 1 = PLN STRATEGY 19

20 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 Business Feedstock Supply Integration and Maritime Logistics Logistics support service Investments Technical safety and environmental protection Communications IT Organic Synthesis Business Strategy and development Engineering support service Infrastructure service Agro Business IR Production integration Business service Energy service STRATEGY 20

21 STRATEGY CORPORATE OBJECTIVES VISION FOR GRUPA AZOTY Grupa Azoty to deliver industry-leading rates of return for shareholders Grupa Azoty to remain one of the three leading players in the European fertilizer market Grupa Azoty to join the blue-chip index of the Warsaw Stock Exchange 2020 ROCE 14% 2020 EBITDA MARGIN > 14% 2020 EBIT MARGIN > 8% Organic growth Operational excellence Mergers and acquisitions PLN 7bn to be spent on organic growth Consolidating a top-three position in fertilizer manufacturing STRATEGY 21

22 ORGANIC GROWTH PLN 7bn CAPEX PROJECTS 32% 30% 19% 11% 4% 2% 2% CORPORATE PROJECTS FERTILIZERS ENERGY PLASTICS OXOPLASTS MELAMINE PIGMENTS the exchange rate as at Dec 1st 2014 EUR 1 = PLN USD 1 = PLN STRATEGY 22

23 OPERATIONAL EXCELLENCE PRODUCTION PRODUKCJA ENERGY INTENSITY REPAIRS AND OVERHAULS PROCUREMENT AND LOGISTICS SUPPORT FUNCTIONS 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 Commitment building programme Periodic evaluation system Objective-based incentive system Flexible working hours Operational control Purpose of the Azoty PRO scheme: PLN 300m plus in annual after completion of the project STRATEGY 23

24 MERGERS AND ACQUISITIONS TARGET SELECTION PROCESS 1 Grupa Azoty business tree 2 Long list of potential targets 3 Business segment maps and matrices 4 Short list of potential targets 5 Company profiles Start of analysis ca. 2,000 entities over 100 entities over 50 entities top 10 entities ACQUISITIONS SINCE controlling interest in ZA Puławy (up to 95,98%) 85% interest in Siarkopol 55% interest in AIG, Senegal (GA Police) 10.4% interest in ZA Puławy in the first public tender offer % interest in ZCh Police 41% interest in ZAK % interest in ATT Polymers GmbH 53% interest in ZAK Consolidated revenues PLN bn STRATEGY 24

25 FINANCIAL HIGHLIGHTS

26 REPORTED FINANCIAL DATA PERFORMANCE BY SEGMENT PLNm 2013 Jan-Sep 2014 SEGMENT (PLNM) REVENUES 2013 REVENUES Jan-Sep 2014 EBIT 2013 EBIT Jan-Sep 2014 Revenues 9,821 7,342 Agro Fertilizers 5,565 4, EBIT EBITDA 1, Net profit Equity 6,271 6,474 Net debt STRUCTURE OF THE GROUP'S CONSOLIDATED REVENUES JAN-SEP 2014 Plastics 1,467 1, Chemicals 2,385 1, Energy Other* EBITDA BRIDGE positive effect on EBITDA negative effect on EBITDA % 20% 40% 60% 80% 100% Grupa Azoty S.A. Grupa Azoty ZAK Group Grupa Azoty POLICE Group Grupa Azoty PUŁAWY Group the exchange rate as at Dec 1st 2014 EUR 1 = PLN USD 1 = PLN FINANCIAL HIGHLIGHTS 26 * Adjusted for gain on bargain purchase of Grupa Azoty PUŁAWY

27 BALANCE SHEET ASSETS Noncurrent assets 68% Inventories 13% PLNm Non-current assets 2013 Jan-Sep ,636 6,660 EQUITY AND LIABILITIES Equity 67% Receivables 12% Other current assets 7% Borrowings 10% Current assets 3,326 3,098 including cash and cash equivalents Total assets 9,962 9,757 PLNm 2013 Jan-Sep 2014 Equity 6,271 6,474 Liabilities, including 3,691 3,284 borrowings 1, other financial liabilities Net debt 455 the exchange rate as at Dec 1st 2014 EUR 1 = PLN USD 1 = PLN Other liabilities 23% Total equity and liabilities 9,962 9,757 the exchange rate as at Sep 30th 2014 EUR 1 = PLN USD 1 = PLN FINANCIAL HIGHLIGHTS 27

28 PRO FORMA DATA COST STRUCTURE RATIOS Other RATIO 2013 H Profitability ratios EBIT margin (%) Depreciation and amortisation EBITDA margin (%) ROCE (%) Labour costs ROE (%) Liquidity ratios Services Current ratio Debt ratios Total debt ratio Net debt (PLNm) PLNm 2013 Jan-Sep 2014 Raw materials and consumables used Debt-to-Equity ratio (%) the exchange rate as at Dec 1st 2014 EUR 1 = PLN USD 1 = PLN FINANCIAL HIGHLIGHTS 28

29 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q KEY RATIOS SINCE THE 2008 IPO - QUARTERLY BASIS* EXTERNAL FACTORS REVENUES AND NET PROFIT FALLING PRICES % - 13% -19% % -9% - 10% +2% Revenue Net profit DAP AMMONIA UREA AS CPL PA6 BENZENE EBITDA AND NET DEBT % 13% 3Q Q % 4% 3Q Q % 10% % -200 DAP Ammonia Urea AS CPL PA6 BENZENE Net debt EBITDA * Grupa Azoty Group FINANCIAL HIGHLIGHTS 29

30 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. 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