PRESENTATION OF Q1 2016 RESULTS May 11th 2016
Agenda Page Overview of Grupa Azoty 3 Market overview 7 Grupa Azoty Group 13 Grupa Azoty PUŁAWY Group 22 Grupa Azoty POLICE Group 30 Grupa Azoty KĘDZIERZYN Group 38 Appendix Parent 44 2
OVERVIEW OF GRUPA AZOTY
KEY DEVELOPMENTS COMMERCIAL CONTRACTS MANAGEMENT OF THE GROUP EDUCATION AWARDS Gas supply contract with PGNiG introducing gas prices linked to market indices Contract with Agro CS for the supply and distribution of UAN on the Czech market Stepping up integration and effective consolidation Personnel changes on the Management and Supervisory Boards Personnel changes in subsidiaries Second edition of the 'Grounded in knowledge' programme OXO and Polymers Application Centre founded in Kędzierzyn Grupa Azoty partners with Texas A&M University and Polish Association of Grain Producers Grupa Azoty ZAK S.A. awarded Employee- Friendly Firm title Champion of Change of Polish Industry title in recognition of unprecedented capital expenditure projects OVERVIEW OF GRUPA AZOTY 4
MANAGEMENT BOARD President of Management Board M. Bober Vice-President of the Management Board of A. Skolmowski Vice-President of the Management Board of W. Szczypiński Member of Management Board A. Kopeć Member of Management Board J. Rojek Member of Management Board T. Hinc Management and HR Finance Director General of Grupa Azoty S.A. Production assets Investments Procurement strategy Audit, risk and compliance Planning and controlling Agro Centre Technical safety Development strategy Strategic and technical procurement Communication Logistics Plastics Business Centre Environmental protection Research and development Raw materials and semi-finished product integration CSR IT Organic Synthesis Business Centre Infrastructure President of the Management Board of Grupa Azoty PUŁAWY Investor relations Production integration Social dialogue OVERVIEW OF GRUPA AZOTY 5
Q1 2016 CAPITAL EXPENDITURE (PLN '000) BUSINESS DEVELOPMENT INVESTMENTS 130,600 BUSINESS MAINTENANCE INVESTMENTS 77,097 MANDATORY INVESTMENTS 29,437 PURCHASE OF FINISHED GOODS 4,543 TOTAL PLN 249,127 thousand OTHER (COMPONENTS, MAJOR OVERHAUL WORK) 7,450 GRUPA AZOTY POLICE PLN 50,041 thousand, GRUPA AZOTY PUŁAWY PLN 27,075 thousand GRUPA AZOTY KĘDZIERZYN PLN 61,724 thousand 6 GRUPA AZOTY S.A. PLN 106,686 thousand OVERVIEW OF GRUPA AZOTY 6
MARKET OVERVIEW
STRONG POSITION IN TARGET MARKETS 90% of revenue derived from sales to EU markets North America 0.5% 0.2% European Union 1 33% 31% Other Europe 1% 1% Asia 5% 3% Poland 57% 62% Q1 2015 Q1 2016 South America 2% 0.03% Africa 2% 2% 1 Excluding Poland GRUPA AZOTY MARKET OVERVIEW 8
MARKET OVERVIEW FERTILIZERS OUTLOOK No indicators of improvement in agricultural activity in the near term. With no prospects for an increase in prices of agricultural products, fertilizer prices are unlikely to go up during the year. PLASTICS Global urea oversupply continues to put pressure on nitrogen fertilizer prices across the board. CHEMICALS Q1 2015 VS. Q1 2016 PRICING TRENDS -14% -15% -34% -32% -28% -10% EUR/t RAW MATERIALS AN CAN USD/t -13% Ammonia Urea DAP NPK AS GRUPA AZOTY MARKET OVERVIEW 9
MARKET OVERVIEW FERTILIZERS PLASTICS OUTLOOK Global and European markets continue to experience oversupply due to imbalance of capacity and demand in China. Stabilisation of crude oil prices as one of the conditions necessary to restore full market equilibrium in the sector and drive anticipated growth in demand for engineering plastics not hampered by other factors. Clear signs of recovery and growing consumption in the textile industry and strong demand in the automotive sector. CHEMICALS Good long-term market outlook for PA6 producers, given the considerable growth potential with respect to extension of the product chain towards more technologically advanced products. Q1 2015 VS. Q1 2016 PRICING TRENDS RAW MATERIALS EUR/t -4 % -8% 2% 4% CPL PA6 Benzene Phenol GRUPA AZOTY MARKET OVERVIEW 10
MARKET OVERVIEW FERTILIZERS PLASTICS CHEMICALS RAW MATERIALS OUTLOOK Q1 2015 VS. Q1 2016 PRICING TRENDS EUR/t Titanium white price declines attributable to the persistent oversupply of the product, forcing producers to temporarily or permanently shut down production facilities. Seasonal spike in demand for titanium white, with prices likely to go up slightly in the second and third quarter of the year. Strong demand from customers in the CEE region and maintenance shutdowns planned by melamine producers likely to drive price rises in the second quarter of the year, but the overall, not fully stable melamine supply/demand situation in the region may strongly affect the prices in the following quarters. -26% -11% -32% 2-EH DOTP Propylene Melamine Titanium white 3% -14% GRUPA AZOTY MARKET OVERVIEW 11
MARKET OVERVIEW FERTILIZERS PLASTICS CHEMICALS OUTLOOK Weak potassium chloride demand, downtrend in prices, and phosphate price corrections led by softening demand for compound fertilizers. High sulfur stocks and lower compound and phosphate fertilizers output bearing down on prices. The market environment of many oil-derived feedstocks (phenol, benzene and propylene) to remain in a strong time-lagged correlation with oil price movements. Lower gas and electricity prices. " In 2016, the average coal price to stay largely flat compared with 2015. GAS PRICES (EUR/MWh) 30 RAW MATERIALS EUR/MWh 25 20 15 10 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 PGNiG tariff TTF DA net of transmission costs GPL DA net of transmission costs GRUPA AZOTY MARKET OVERVIEW 12
GRUPA AZOTY GROUP
GRUPA AZOTY GROUP: KEY FINANCIALS REVENUE 2 834 2 281 2 401 2 503 2 476 Q1 2015** Q2 2015 Q3 2015 Q4 2015 Q1 2016 EBITDA EBITDA (adjusted)* EBITDA MARGIN 17,1% 12,8% 12,6% 20,9% 485 293 223 9,3% 314 358 517 1Q 2015** 2Q 2015 3Q 2015 4Q 2015 1Q 2016 NET PROFIT NET PROFIT (adjusted)* NET PROFIT MARGIN 10,8% 6,7% 6,1% 12,4% 306 152 82 3,4% 152 187 307 Adjusted for impairment losses on the benzene derived C-none production unit, fat processing plant, and carbon disulfide plant in 2015 * Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY GROUP 1Q 2015** 2Q 2015 3Q 2015 4Q 2015 1Q 2016 14
GRUPA AZOTY GROUP: EBITDA KEY DRIVERS 2 3 6 9 171 positive effect on EBITDA negative effect on EBITDA 408 189 893 892 886 877 706 485 485 517 517 EBITDA Q1 2015* Lower cost of sales Other income Selling and distribution expenses Administrative expenses Profit/(loss) on other activities Lower sales volumes Lower selling prices EBITDA Q1 2016 & Price pressure in fertilizers partly offset by lower prices of energy carriers, mainly gas & Gas cost advantage reflected in melamine profitability & Improved profitability of OXO products driven by feedstock prices falling faster than selling prices & Performance buoyed by upward exchange rate movements (mainly with respect to USD exposures) ( CPL-benzene and PA6-benzene deltas down on strong price pressures and unstable feedstock environment (benzene/phenol) ( Lower sales volumes in the fertilizer business * Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY GROUP 15
GRUPA AZOTY GROUP: PERFORMANCE BY SEGMENT SEGMENT REVENUE EBITDA Q1 2015* Q1 2016 Q1 2015* Q1 2016 Agro Fertilizers 1,798 1,576 375 379 Plastics 340 278-2 -13 Chemicals 608 535 54 87 Energy 58 61 26 26 Other 30 26 32 38 Q1 2015 VS. Q1 2016 CHANGE IN EBITDA 170 1% Q1 2016 REVENUE Plastics 278 124 78-550% 61% 0% 19% Agro Fertilizers 1576 32 Chemicals 535-14 GRUPA AZOTY GROUP Agro Fertilizers Plastics Chemicals Energy Other Activities 16 Other 26Energy 61 * Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements)
GRUPA AZOTY GROUP: AGRO FERTILIZERS Q1 2015* Q1 2016 CHANGE VOLUMES Q1 2015 Q1 2016 Segment revenue including: Nitrogen fertilizers and ammonia 1,798 1,576-12% ( 1,185 992-16% ( Compound fertilizers 492 466-5% ( EBITDA 375 379 1% 1 100 EBITDA margin 21% 24% 0 825 550 275 Compound fertilizers '000 tonnes GRAIN PRICES NITROGEN PRODUCT PRICES 1800 5 600 270 1450 4 475 253 PLN/t 1100 USD/t 3 350 1 kg N /1 kg 235 EUR/t 750 1 225 218 400 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Consumable wheat PLN/t Fodder corn PLN/t Oilseed rape PLN/t 1 kg N/1 kg consumable wheat ratio Source: Ministry of Agriculture and Rural Development 0 100 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Ammonia USD/t Urea USD/t Calcium ammonium nitrate CAN EUR/t Ammonium sulfate AS USD/t Source: ICIS, Argus FMB, Profercy. 200 Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY GROUP 17
GRUPA AZOTY GROUP: PLASTICS Q1 2015* Q1 2016 CHANGE VOLUMES Q1 2015 Q1 2016 Segment revenue, including: 340 278-18% 28 Polyamide 197 177-10% Caprolactam 111 75-33% EBITDA -2-13 -550% EBITDA margin -1% -5% 21 14 7 0 '000 tonnes Polyamide Caprolactam PRICES OF BENZENE, PHENOL, CPL, PA6 2200 1700 EUR/t 1200 700 200 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Benzene Liquid caprolactam PA6 Phenol Source: ICIS, TECNON Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY GROUP 18
GRUPA AZOTY GROUP: CHEMICALS Q1 2015* Q1 2016 CHANGE Segment revenue including: 608 535-12% OXO products 142 96-33% Urea (technical grade) 141 109-23% Melamine 96 100 4% Titanium white 74 68-8% EBITDA 54 87 61% 120 90 60 30 VOLUMES Q1 2015 Q1 2016 EBITDA margin 9% 16% 0 '000 tonnes Titanium white OXO products PRICES OF DOTP, 2-EH AND PROPYLENE 1600 1400 1200 EUR/t 1000 800 600 400 Propylene DOTP 2-EH Source: ICIS * Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY GROUP Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 19
GRUPA AZOTY GROUP: STATEMENT OF FINANCIAL POSITION RATIOS Profitability ratios Q1 2015* Q1 2016 Non-current assets Mar 31 2015* Mar 31 2016 CHANGE 6,691 7,352 10% EBIT margin (%) 12.8 15.7 EBITDA margin (%) 17.1 20.9 ROCE (%) 4.5 4.2 ROE (%) 4.5 4.1 Liquidity ratios Current ratio 1.6 2.0 Debt ratios Total debt ratio (%) 33.4 33.5 Net debt 54-43 Current assets 3,497 3,795 9% including cash and cash equivalents and short-term investments of up to one year 1,047 1,381 35% TOTAL ASSETS 10,188 11,148 9% Mar 31 2015* Mar 31 2016 CHANGE Equity 6,783 7,419 9% Liabilities 3,405 3,729 10% including financial debt 1,102 1,338 18% Debt to equity ratio (%) 50.2 50.3 TOTAL EQUITY AND LIABILITIES 10,188 11,148 9% Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY GROUP 20
GRUPA AZOTY GROUP: COST STRUCTURE 3 000-11% Y/Y CHANGE 2 250 142 121 288 135 127-300 -225-150 -75 0 75 242 314 1 500 240 750 1 556 1 268 0 Q1 2015* Q1 2016 Raw materials and consumables used Services Labour costs Depreciation and amortisation Other Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY GROUP 21
GRUPA AZOTY PUŁAWY GROUP
GRUPA AZOTY PUŁAWY GROUP: KEY FINANCIALS REVENUE 1 070 848 935 960 952 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 EBITDA Kolumna1 EBITDA MARGIN 227 21,3 144 17,0 118 12,6 172 17,9 227 23,9 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 NET PROFIT Kolumna1 NET PROFIT MARGIN 175 16,3 95 11,2 65 6,9 114 11,9 161 16,9 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Grupa Azoty PUŁAWY 23
GRUPA AZOTY PUŁAWY GROUP: PERFORMANCE KEY DRIVERS positive effect on EBITDA negative effect on EBITDA 23 19 12 77 PLNm 227 112 227 339 362 381 316 61 255 15 240 8 232 5 227 227 EBITDA Q1 2015 Lower other cost of sales Lower raw material volumes* Lower product sales volumes Higher selling and distribution expenses EBITDA Q1 2016 Lower prices of key feedstocks Lower selling prices Lower sales volumes *Only the Parent Grupa Azoty PUŁAWY 24
GRUPA AZOTY PUŁAWY GROUP: PERFORMANCE BY SEGMENT SEGMENT REVENUE EBITDA Q1 2015 Q1 2016 Q1 2015 Q1 2016 Agro 743 662 205 213 Chemicals 294 252 32 42 Energy 20 23 12 13 Other Activities 12 13 4 0 Q1 2015 VS. Q1 2016 CHANGE IN EBITDA 240 +4% Q1 2016 REVENUE 200 160 Agro 70% 120 80 40 0 +31% +8% -100% Agro Chemicals Energy Other Chemicals 27% Grupa Azoty PUŁAWY 25 Other Energy 1% 2%
GRUPA AZOTY PUŁAWY GROUP: AGRO VOLUMES Q1 2015 Q1 2016 CHANGE Q1 2015 Q1 2016 Revenue 743 662-10.8% ( Nitrogen fertilizers 626 540-13.7% ( Phosphate and compound fertilizers 74 65-12.2% ( Other products and services 10 11 10.0% & Merchandise and materials 33 46 39.4% & EBITDA 205 213 3.9% & 600 500 400 300 200 100 EBITDA margin 27.6% 32.2% 4.6 p.p. & 0 '000 tonnes Nitrogen fertilizers Other PRICES OF AN, UAN AND UREA 400 400 EUR/t 325 250 175 317 233 USD/t 100 150 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Urea USD/t Ammonium nitrate AN EUR/t UAN EUR/t Source: Argus FMB, Profercy Grupa Azoty PUŁAWY 26
GRUPA AZOTY PUŁAWY GROUP: CHEMICALS Q1 2015 Q1 2016 CHANGE VOLUMES Q1 2015 Q1 2016 Revenue 294 252-14.4% ( Melamine 96 100 4.2% & Caprolactam 105 71-32.4% ( Urea 65 51-21.5% ( 60 45 Other products and services 26 29 11.5% & 30 Merchandise and materials 2 1-50.0% ( EBITDA 32 42 31.3 & 15 EBITDA margin 11.0% 16.8% 5.8 p.p. & '000 tonnes 0 Melamine Other PRICES OF MELAMINE AND CAPROLACTAM 1400 2500 2125 EUR/t 1300 1750 1375 USD/t 1200 1000 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Crystalline caprolactam USD/t Melamine EUR/t Source: ICIS GRUPA AZOTY PUŁAWY 27
GRUPA AZOTY PUŁAWY GROUP: STATEMENT OF FINANCIAL POSITION RATIOS Q1 2015 Q1 2016 Mar 31 2015 Mar 31 2016 CHANGE Profitability ratios EBIT margin (%) 17.7% 19.0% EBITDA margin (%) 21.3% 23.9% ROCE (%) 6.0% 5.3% ROE (%) 6.0% 5.0% Liquidity ratios Current ratio 2.7% 2.9% Debt ratios Total debt ratio (%) 21.4% 21.5% Non-current assets 2,145 2,208 2.9% & Current assets 1,549 1,867 20.5% & incl. cash and cash equivalents 639 910 42.4% & TOTAL ASSETS 3,694 4,075 10.3% & Mar 31 2015 Mar 31 2016 CHANGE Equity 2,903 3,201 10.3% & Liabilities 791 874 10.5% & incl. borrowings 6 29 383.3% & Net debt -627-875 Debt to equity ratio (%) 27.2% 27.3% other financial liabilities TOTAL EQUITY AND LIABILITIES 6 6-3,694 4,075 10.3% & GRUPA AZOTY PUŁAWY 28
GRUPA AZOTY PUŁAWY GROUP: COST STRUCTURE 950-16% Q/Q CHANGE 129 792 633 38 89 86 60 46 120-120 -90-60 -30 0 30 60 475 82 PLNm 317 158 0 571 455 Q1 2015 Q1 2016 Raw materials and consumables used Services Employee benefits expense Depreciation and amortisation Other DRIVERS Cost of raw materials and consumables used down mainly on lower gas and coal prices. Higher cost of labour resulting from financial performance. GRUPA AZOTY PUŁAWY 29
GRUPA AZOTY POLICE GROUP
GRUPA AZOTY POLICE: KEY FINANCIALS REVENUE 746 694 600 702 687 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 15,5% EBITDA EBITDA MARGIN 12,7% 12,0% 94 83 6,5% 10,8% 76 107 39 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 9,9% NET PROFIT NET PROFIT MARGIN 6,8% 51 8,0% 56 2,6% 6,1% 43 68 15 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 GRUPA AZOTY POLICE GROUP 31
GRUPA AZOTY POLICE: PERFORMANCE BY SEGMENT SEGMENT REVENUE EBITDA Q1 2015 Q1 2016 Q1 2015 Q1 2016 Fertilizers 659 606 91 103 Pigments 76 71 1.7 2.4 Other 11 10 2 2 Q1 2015 VS. Q1 2016 CHANGE IN EBITDA Fertilizers 88% Q1 2016 REVENUE 91 103 EBITDA 2 2 2 2 Fertilizers Pigments Other Other 1% Pigments 10% GRUPA AZOTY POLICE GROUP 32
GRUPA AZOTY POLICE GROUP EBITDA KEY DRIVERS positive effect on EBITDA negative effect on EBITDA 55 19 38 53 30 8 94 94 147 182 144 115 107 107 EBITDA Q1 2015 prices of key raw materials/feedstocks movements in finished goods inventory Lower product prices Favourable movements in the prices of natural gas, fine coal, sulfur and ilmenite Lower volumes of key products sold Lower selling prices of ammonia, urea and titanium white GRUPA AZOTY POLICE GROUP 33 Lower sales volumes Raw material volumes Higher fixed costs EBITDA Q1 2016
GRUPA AZOTY POLICE: FERTILIZERS Q1 2015 Q1 2016 CHANGE Revenue 659 605-8% ( Compound fertilizers 441 426-3% ( Urea 116 101-13% ( 300 225 VOLUMES Q1 2015 Q1 2016 Ammonia 86 59-31% ( Other 16 19 21% & EBITDA 91 103 13% & EBITDA margin 14% 17% 23% & PRICES OF NPK, DAP, PHOSPHATE ROCK, POTASSIUM CHLORIDE 600 150 75 0 '000 tonnes Compound fertilizers Urea Ammonia Other 475 USD/t 350 225 100 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 NPK DAP Phosphate rock Potassium chloride GRUPA AZOTY POLICE GROUP 34
GRUPA AZOTY POLICE: PIGMENTS Q1 2015 Q1 2016 CHANGE Revenue 76 71-7% ( Titanium white 73 68-7% ( Other 3 3 8% & EBITDA 1.7 2.4 42% & EBITDA margin 2% 3% 52% & 9 7 5 2 0 '000 tonnes Volumes Q1 2015 Q1 2016 Titanium white Other PRICES OF TITANIUM WHITE, ILMENITE AND TITANIUM SLAG 2400 800 2275 600 EUR/t 2150 400 USD/t 2025 200 1900 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Titanium white EUR/t Ilmenite USD/t Titanium slag USD/t 0 GRUPA AZOTY POLICE GROUP 35
GRUPA AZOTY POLICE: STATEMENT OF FINANCIAL POSITION RATIOS Q1 2015 Q1 2016 Mar 31 2015 Mar 31 2016 CHANGE Profitability ratios Non-current assets 1,359 1,546 14% EBIT margin 9% 12% EBITDA margin 13% 16% ROCE 5% 5% ROE 4% 5% Current assets 722 705-2% incl. cash and cash equivalents 93 52-44% TOTAL ASSETS 2,081 2,251 8% Liquidity ratios Current ratio 1.1 1.3 Mar 31 2015 Mar 31 2016 CHANGE Debt ratios Total debt ratio 45% 42% Net debt 166 275 Equity-to-debt ratio 124% 136% Equity 1,150 1,295 13% Liabilities 931 956 3% incl. borrowings 251 319 27% other financial liabilities TOTAL EQUITY AND LIABILITIES 8 8 0% 2,081 2,251 8% GRUPA AZOTY POLICE GROUP 36
GRUPA AZOTY POLICE: COST STRUCTURE 700-1.9% y/y change 525-18 -14-9 -5 0 5 350 175 DRIVERS Lower gas prices Higher labour costs driven by pay rises 0 Q1 2015 Q1 2016 Raw materials and consumables used Services Labour costs Depreciation and amortisation Other GRUPA AZOTY POLICE GROUP 37
GRUPA AZOTY ZAKŁADY AZOTOWE KĘDZIERZYN S.A.
GRUPA AZOTY KĘDZIERZYN: KEY FINANCIALS REVENUE 543 397 435 441 441 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 23,6% EBITDA EBITDA MARGIN 17,1% 15,4% 93 6,8% 8,0% 68 104 27 35 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 15,0% NET PROFIT NET PROFIT MARGIN 11,0% 60 8,6% 66 3,0% 3,2% 38 12 14 1Q 2015 2Q 2015 3Q 2015 4Q 2015 1Q 2016 Grupa Azoty POLICE 39
GRUPA AZOTY KĘDZIERZYN: PERFORMANCE BY SEGMENT SEGMENT REVENUE EBITDA Q1 2015 Q1 2016 Q1 2015 Q1 2016 Fertilizers 313 255 87 83 alcohols 199 158-2 14 Other 31 28 8 7 Q1 2015 VS. Q1 2016 CHANGE IN EBITDA Q1 2016 REVENUE 87 83 OXO alcohols 36% 14 8 7 Fertilizers 58% -2 Fertilizers OXO alcohols Other Other 6% GRUPA AZOTY KĘDZIERZYN 40
GRUPA AZOTY KĘDZIERZYN: STATEMENT OF FINANCIAL POSITION RATIOS Profitability ratios Q1 2015 Q1 2016 EBIT margin (%) 13.8 18.7 EBITDA margin (%) 17.2 23.6 ROCE (%) 5.7 5.5 ROE (%) 5.4 5.6 Non-current assets Mar 31 2015 Mar 31 2016 CHANGE 1,030 1,289 25% Current assets 601 536-11% incl. cash and cash equivalents 133 192 44% TOTAL ASSETS 1,631 1,825 12% Liquidity ratios Current ratio 1.8 1.6 Debt ratios Total debt ratio (%) 31.4 34.8 Mar 31 2015 Mar 31 2016 CHANGE Equity 1,119 1,190 6% Liabilities 512 635 5% incl. borrowings 111 191 72% Net debt -19 2 Debt to equity ratio (%) 45.8 53.3 other financial liabilities TOTAL EQUITY AND LIABILITIES 3 3-1,631 1,825 12% GRUPA AZOTY KĘDZIERZYN 41
DISCLAIMER The information presented below has been prepared by the Grupa Azoty Group (the Group ) solely for the purpose of presentation to investors and market analysts on May 11th 2016 (the Presentation ). By participating in the meeting at which the Presentation is presented or by referring to the following Presentation, you agree to the following specific restrictions and disclaimers. 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 guarantee to purchase or acquire in other way, any securities of any company of the Group. Neither this Presentation nor any part hereof may form the basis of, or be relied upon in connection with, any subscription for any securities of the Group, or their acquisition. Neither this Presentation nor any part hereof may form the basis of, or be relied upon in connection with, any investment agreement, commitment or 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, expressed 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 information or opinions contained in this Presentation. This Presentation may contain forward-looking statements. Forward-looking statements are different from statements of historical facts. Statements containing such words as "expects", "intends", "plans", "believes", "anticipates", "will", "aims", "can", "would", "could", "continues" or similar words are examples 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 be materially different from those described in statements concerning the past, and from the results and achievements of the Group in the past. Forward-looking statements are made based on various assumptions of future events, including numerous assumptions regarding present 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 advisers are not obliged to publish any updates or modify any information, data or statements contained in this Presentation in the event of a change of strategy or the intentions of the Group, or of facts or circumstances that will have an impact on the strategy or intentions of the Group, unless such an obligation arises under law. Please note that the only reliable source of data on the Group's financial results, forecasts, events and indicators of the Group are the current and periodic reports released by the Group as part of its 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 from 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 shall be 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 globally, including information on market shares of the Company and some of its competitors. The source of this information is always provided in this Presentation and the Group or any other entity acting on behalf of the Group has independently verified the information referred to above. This Presentation is not intended 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 oblige the Group or any of its affiliates to obtain an authorization or licence, or to comply with the registration requirements under applicable laws. Neither this Presentation nor any part hereof may be copied or transmitted into the United States of America, and cannot be disseminated, directly or indirectly, in the United States of America. Failure to comply with this restriction may constitute a violation of U.S. securities laws. Persons who come into possession of this Presentation are required to inform themselves of, and to observe all of the above restrictions. None of the securities referred to herein have been or will be registered under the U.S. Securities Act of 1933. Any such securities may not be offered or sold in the United States of America, except pursuant to an exemption or in a transaction not required to be registered under the Act. 42
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APPENDIX 1 PARENT
KEY RATIOS SINCE IPO 2008, QUARTERLY * 2 500 REVENUE AND NET PROFIT 500 1 750 350 1 000 200 250 50-500 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015* Q3 2015 Q1 2016-100 Revenue Net profit (right axis) 700 EBITDA AND NET DEBT 525 350 175 0-175 Q1 2008 Q3 2008 Q1 2009 Q3 2009 Q1 2010 Q3 2010 Q1 2011 Q3 2011 Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Q3 2015 Q1 2016 Net debt EBITDA *Grupa Azoty Group GRUPA AZOTY S.A. 45
GRUPA AZOTY S.A.: KEY FINANCIALS REVENUE 498 370 468 437 436 Q1 2015** Q2 2015 Q3 2015 Q4 2015 Q1 2016 EBITDA EBITDA (adjusted)* EBITDA MARGIN 10,7% 12,9% 54 4,7% 4,5% 56 18 21 4 0,9% 16 1Q 2015** 2Q 2015 3Q 2015 4Q 2015 1Q 2016 NET PROFIT NET PROFIT (adjusted)* NET PROFIT MARGIN 59,0% 218 18 3,6% -12-6 -1,3% -21-4,8% -11 22 5,1% 1Q 2015** 2Q 2015 3Q 2015 4Q 2015 1Q 2016 * Adjusted for impairment losses recognised on benzene-derived C-none production unit in Q4 2015 * Net profit adjusted for dividends received (in all reporting periods) ** Restated following adoption of uniform accounting policies across the Group (see Section 2.2.c of the Supplementary information to the financial statements) GRUPA AZOTY S.A. 46
GRUPA AZOTY S.A.: PERFORMANCE BY SEGMENT SEGMENT REVENUE EBITDA Q1 2015 Q1 2016 Q1 2015 Q1 2016 Fertilizers 250 218 39 49 Plastics 237 206 7 1 Energy 5 8 4 3 Other 6 4 4 3 Q1 2015 VS. Q1 2016 CHANGE IN EBITDA +26% 49 39 Q1 2016 REVENUE Modified 47% -86% -25% -25% 7 1 4 3 4 3 Fertilizers Plastics Energy Other Fertilizers 50% GRUPA AZOTY S.A. 47 Other 1% Energy 2%
GRUPA AZOTY S.A.: FERTILIZERS Q1 2015 Q1 2016 CHANGE Segment revenue including 250 218-13% ( Nitrogen fertilizers 223 200-10% ( EBITDA 39 49 26% EBITDA margin 16% 22% 240 180 120 60 0 '000 tonnes VOLUMES Q1 2015 Q1 2016 Nitrogen fertilizers PRICES OF AMMONIA, AMMONIUM SULFATE AND CALCIUM AMMONIUM NITRATE 600 270 500 253 USD/t 400 300 235 EUR/t 200 218 100 200 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Ammonia USD/t Calcium ammonium nitrate CAN EUR/t Ammonium sulfate AS USD/t Source: Argus FMB, ICIS GRUPA AZOTY S.A. 48
GRUPA AZOTY S.A.: PLASTICS Q1 2015 Q1 2016 CHANGE Segment revenue including 237 206-13% Polyamide 169 150-11% Caprolactam 15 10-33% EBITDA 7 1-86% 30 23 15 8 VOLUMES Q1 2015 Q1 2016 EBITDA margin 3% 0% 0 PRICES OF BENZENE, PHENOL, CPL, PA6 Polyamide Caprolactam 2200 1700 EUR/t 1200 700 200 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Benzene Liquid caprolactam PA6 Phenol Source: ICIS, TECNON GRUPA AZOTY S.A. 49
GRUPA AZOTY S.A.: COST STRUCTURE 500-5.9% y/y change 375-30 -23-15 -8 0 8 250 125 0 1Q 2015 1Q 2016 Other Depreciation and amortisation Labour costs Services Raw materials and consumables used Grupa Azoty S.A. 50
SHARE PERFORMANCE 3 000 120 Growth from Jun 30 2008:422% High (Dec 8 2015) PLN 113.00 Low (Feb 3 2009) PLN 6.00 2 250 90 1 500 60 750 30 0 Jul/12 Oct/12 Feb/13 Jun/13 Oct/13 Feb/14 May/14 Sept/14 Jan/15 Trading May/15 volume Sept/15 Dec/15 Apr/16 Aug/16 Dec/16 Apr/17 Aug/17 Nov/17Price Apr/18 Jul/18 Nov/18 Mar/19 Jul/19 Oct/19 Feb/20 0 GRUPA AZOTY S.A. 51
Contact: Investor Relations Office ir.tarnow@grupaazoty.com