INVESTOR PRESENTATION Q3 2018 2 GRUPA AZOTY AT A GLANCE GRUPA AZOTY Grupa Azoty, Poland's largest chemical company and a significant chemical industry player in the EU market, is one of the major chemical groups in the EU, offering a diversified product portfolio – from mineral fertilizers and engineering plastics through OXO products to melamine.
4 locations of main production plants
60 group companies
Approximately 15,000 employees
No. 2 in the UE in mineral fertilizer production No. 3 in the EU in PA6 production 3 GRUPA AZOTY AT A GLANCE KEY DATA
FINACIAL RESULTS PLNm MARKET PLN 3.4bn Jan–Sep 2018 CAPITALISATION REVENUE 7,202
SHARES 99,195,484 shares EBITDA 573
EBITDA MARGIN 8% min/max price NET PROFIT* 59 PLN 6 - PLN 113
NET DEBT 766 1M average trading volume PLN 3.204m NET DEBT/EBITDA 0.97 (ratio)
WSE: WIG30, mWIG40, WIG- STOCK CHEMIA, WIG30, mWIG 40, INFORMATION WIG, WIG-Poland
FOREIGN INDEXES: MSCI, FTSE
ESG: RESPECT INDEX, FTSE4GOOD, MSCI ESG
* Data adjusted for one-off items 4 GRUPA AZOTY AT A GLANCE OWNERSHIP STRUCTURE
STATE TREASURY Pozostali 25.75% - Government of Poland EBOiR 2.87% - Represented by the Chancellery TFI PZU S.A. of the Prime Minister 8.60% Opansa Enterprises EBRD Limited - European Bank of Research and 9.51% Development Norica indirectly - Shareholder since 2013 19.82% Rainbee ING OFE Holdings TFI PZU S.A. 9.96% Limited - Financial investor Skarb 9,90% Państwa ING OFE (NN OFE) 33.00% Norica Holding - Financial investor S.à. r.l. 0.41% NORICA HOLDING S.À. R.L. - Subsidiary of Acron and Mr. Viatcheslav Kantor - Shareholder since 2012 - Norica and its subsidiaries hold 19.82% of shares
Free float – 25.75 %
Based on official notifications received by the Company 5 GRUPA AZOTY MANAGEMENT BOARD DIVISION OF RESPONSIBILITIES AMONG MANAGEMENT BOARD MEMBERS
President of the Vice President of Vice President of the Vice President of Vice President of Member Management Board the Management Management Board the Management the Management of the Management Wojciech Wardacki, Board Grzegorz Board Board Board PhD Witold Szczypiński Kądzielawski, PhD Paweł Łapiński Mariusz Grab Artur Kopeć
Management Director General Infrastructure Procurement Production assets and HR policy Grupa Azoty S.A. Finance strategy
Raw material and Research and Planning Plant safety Audit and risk Agro Segment product and infrastructure development and controlling integration
Communication Plastics Segment Environmental Growth strategy Logistics protection
Organic Synthesis Social dialogue CSR Segment Investments
President of the Management Board Production Grupa Azoty integration Investor relations POLICE
M&A
GRUPA AZOTY S.A. 5 6 GRUPA AZOTY AT A GLANCE BROAD PRODUCT PORTFOLIO
Agro Fertilizers 48%
Chemicals Other 31% 2% Energy 3% Plastics 16%
Jan–Sep 2018 7 GRUPA AZOTY AT A GLANCE CORE BIZNES
ZMPP BBM Fosfory Grupa Azoty Police Port ZMPP Terminal NPK • Port Navitrans Urea NPK TiO2 • Logistics Grupa Azoty Puławy Ammonia N fertilizers Urea Melamine CPL Goat TopCo GmbH Grupa Azoty Grupa Azoty Siarkopol Speciality ATT Polymers S fertilizers PA6 Grupa Azoty S.A. Parent Z.A. ChorzówGrupa S.A. Azoty Grupa Azoty S.A.N fertilizers CPL Kędzierzyn NPK • AN, CAN • ASN,Compounding AS PA6 Logistics • CPL, PA 6, POM N fertilizers Urea • Compounding Logistics Production Production OXO Plasticizers ACQUISITIONS 9 ACQUISITIONS CREATING VALUE FOR GRUPA AZOTY THROUGH ACQUISITIONS
• Puławy (up to 95.98%) • Transaction completed on • Siarkopol (99.33%) November 26th 2018
• Puławy (10.4%) 9.9 10.0 9.8 9.6 9.0 • Police (66%) • Kędzierzyn (94%) 7.1 7.2
5.3 • ATT Polymers GmbH (100%) • Kędzierzyn (53%)
1.9 1.3 1.4 1.2
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Jan-Sep 2018
Consolidated revenue (PLNbn)
9 10 ACQUISITIONS ENHANCED FERTILIZER PRODUCT PORTFOLIO
Fertilizer value pyramid
COMPO EXPERT Speciality fertilizers product portfolio Liquid fertilizers Technologically advanced agrochemical products with a and biostimulants higher added value than commodity fertilizers. Designed mainly for high-value crops (fruit, vegetables, ornamental plants). Speciality fertilizers are priced higher, but offer Fertigation many benefits, including slow release of nutrients. Some and foliar speciality products can be used for covered or greenhouse fertilizers cultivation, as well as for lawns and turf grass. They are available in solid form (granules) and as liquids (for soil and foliar application). The most advanced products positively influence certain characteristics of the plants, such as size, SRF | CRF colour or – in the case of fruit and vegetables – taste.
Stabilised NPK
Volume Margin
NPK (SOP-based) NPK (MOP-based) Grupa Azoty Commodity fertilizers product portfolio Standard fertilizers widely applied all around the world. Typically UAN | ASN | CAN contain one or two nutrients. In the case of NPK fertilizers, they are based on potassium chloride. Priced lower that speciality fertilizers. AN | AS | DAP
Ammonia | Urea 11 ACQUISITIONS COMPO EXPERT SALES MARKETS
(2017)
Americas Western and Central Europe Revenue (FY 2017)
approximately
Southern Europe and Africa Asia and Australia EUR 333m
Adjusted EBITDA (FY 2017)
approximately EUR 30m
Markets reached by COMPO EXPERT products Key sales market 12 ACQUISITIONS COMPO EXPERT ACQUISITION
INTEGRATION INITIATIVES Consolidation of the Grupa Appointment of consolidation teams for: Azoty Group’s and the Procurement TopCo Goat Group’s Agro Segment’s sales and marketing financial statements Research and development Manufacturing, technical and technology areas since Q4 2018 Accounting and financial flows Legal Corporate supervision IT 1. 2. 3. 4. 5.
Production Sales synergies R&D synergies Raw material Financing know-how and product synergies synergies synergies OPERATIONS 14 OPERATIONS ENERGY COMMODITIES
ELECTRICITY PRICES [YOY] NATURAL GAS PRICES
PLN/MWh 33% 48% 290 140 30 130 25 240 120
190 110 20 100 140 15
Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 90 PLN/MWh IRDN EUR/MWh 80 10 70 5 HARD COAL PRICES [YOY] 60 50 0 USD/t sty 16 kwi 16 lip 16 paź 16 sty 17 kwi 17 lip 17 paź 17 sty 18 kwi 18 lip 18 paź 18 120 0% Average gas price paid by GA PGNiG tariff gas price Imported gas price 100 PPE gas price TTF DA gas price (right axis)
80
60 NATURAL GAS CONSUMPTION (MILLION MWH) 40 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 ARA H1 2018 TOTAL 11.8
CO2 PRICES [YOY] Grupa Azoty S.A. 1.0 EUR/t 180% Grupa Azoty POLICE 2.9 22 17 Grupa Azoty PUŁAWY 5.7 12 7 Grupa Azoty KĘDZIERZYN 2.2 2 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 EEX 15 OPERATIONS AGRO FERTILIZERS
2017 PRODUCTION CAPACITIES Revenue: Compound YARA PLN 5.3bn fertilizers 36% Grupa Azoty Nitrogen 4 Agrofert No. 2 fertilizers and 3 EBITDA: 0% 0% in EU ammonia Borealis PLN 484m 64% 6 5 0% 0% Fertiberia
EBITDA MARGIN: Eurochem No. 1 9.6% Achema JSC in Poland Timac Agro
Azomures TARGET MARKETS Petrokemija
[tt] 0 5 000 10 000 15 000
Europe - EU (excl. Source: Fertilizers Europe other Poland) 0.2% 2.8% South America Poland 0.2% 6.8% Africa 0.1% North America Asia 0.0% 0.0% 16 OPERATIONS CHEMICALS
2017
Revenue: PLN 2.8bn
EBITDA: Melamine Titanium PLN 348m 17% white 13%
EBITDA MARGIN: 12.5% Urea (technical Other grade) 21% 21%
PRODUCT GROUPS
Plasticizers OXO alcohols 8% 20% 17 OPERATIONS CHEMICALS PRODUCTION CAPACITIES Construction industry PLASTICIZERS*
ExxonMobil
Basf Plasticizers Evonik No. 5 Electric cables and wiring Oxoviflex in EU Polynt
Grupa Azoty No. 1 OXEA GROUP in DEZA Aldehydes Poland Footwear Perstorp OXO AB
[tt] 0 100 200 300 400 500
OXO * *
Automotive Basf OXO alcohols Oxea Group No. 5 Ineos in EU Perstrop OXO AB No. 1 Grupa Azoty Paints and varnishes in Oltchim SA Poland
[tt] 0 100 200 300 400 500 *Production capacities for phthalate plasticizers and terephthalate plasticizers. ** Production capacities for 2-EH, N-butanol, isobutanol. Source: Plasticizers Alkohols 2013 and Plasticizers (UE) 2013 18 OPERATIONS CHEMICALS
PRODUCTION CAPACITIES Wood processing (laminates, resins, adhesives) MELAMINE
OCI Melamine Automotive industry (varnishes) Grupa Borealis No. 3 Paper industry in EU Grupa Azoty Electrotechnical industry BASF SE No. 1 in Poland Anti-inflammatory agents Azomures S.A.
Plastics [tt] 0 20 40 60 80 100 120 140 160
Rubber, leather TITANIUM WHITE and ceramic industries
No. 1 Textile and cosmetics industries in Poland
Paints Laminates Paper Varnishes
OPERATIONS 19 OPERATIONS PLASTICS
2017 PRODUCTION CAPACITIES Revenue: PLN 1.4m Caprolactam POLYAMIDE 6 26%
Polyamide EBITDA: 68% Other BASF* PLN 221m 6% Lanxess*
GRUPA AZOTY* EBITDA MARGIN: Aquafil* 15.6% No. 3 DSM* in EU
Radici TARGET MARKETS Domo* No. 1 Rhodia in Poland Nyobe UE 64% Ube*
Nurel Asia 10% 0 50 100 150 200 250
Poland other 23% 3%
Source: PCI Nylon, YellowBook 2015 Integrated INVESTMENTS 21 STRATEGY STRATEGIC GROWTH DIRECTIONS
Our mission
Create value for the Company and the Reinforce leadership national economy by delivering safe, Complete the Group in agricultural useful and innovation-driven chemical consolidation process solutions in Europe products 1. 2.
Our vision
Deploy state-of-the-art and comprehensive chemical industry Strengthen the second Develop and solutions that meet stakeholder operating pillar by implement innovations expectations expanding the non- to drive growth of the fertilizer business chemical industry 3. 4. 22 INVESTMENTS INVESTMENTS
CAPITAL EXPENDITURE RESEARCH AND DEVELOPMENT CENTRE IN TARNÓW (PLNm)
2014 2015 2016 2017 I-IX 2018
CAPEX in CAPEX PROJECTS Jan–Sep including: 2018
GROWTH CAPEX 422 (PLNbn) CAPEX MAINTENANCE CAPEX 126 1.6bn
MANDATORY CAPEX 31 1.1bn PURCHASE OF FINISHED GOODS 29
OTHER (COMPONENTS, MAJOR OVERHAULS) 100 1.3 0.9 TOTAL 708
CONSOLIDATED CAPEX – CASH FLOW 771 Plan 2018 Prognoza 2018 CAPEX organiczny Remonty komponentów Ulepszenia 23 INVESTMENTS COMPLETED INVESTMENT PROJECTSORGANIC GROWTH
Polyamide Unit in Tarnów New Research and Development Centre in Tarnów New CHP plant in Kędzierzyn – phase 1
Pulgran/PulgranS in Puławy
Upgrade of the ammonia unit in Police Flue Gas Treatment Unit in Tarnów (project co-financed under the Norwegian Financial Mechanism)
INVESTMENTS 23 24 MAIN PROJECTS IN PROGRESS POLICE POLYMERS
MANUFACTURING COMPLEX PROJECT SCOPE: Propylene and polypropylene units, a polypropylene logistics base, and a propane and ethylene handling and storage PROPYLENE UNIT terminal
Annual production capacity – approximately 400,000 POLYPROPYLENE tonnes UNIT Start of construction – end of 2019 Commercial commissioning – 2022 Financing under a project finance model: SEA TERMINAL a) equity – 50% WITH FEEDSTOCK b) debt capital – 50% TANK FARM Location: within the Pomeranian Special Economic Zone (state aid of up to PLN 428m) AUXILIARY AND LOGISTICS Budgeted cost of the project: EUR 1.27bn INFRASTRUCTURE
PROJECT’S KEY BENEFITS: diversification of revenue streams, additional profits for the Grupa Azoty Group, expansion of the product portfolio, flattening of business cycles
INVESTMENTS 24 25 MAIN PROJECTS IN PROGRESS NITRATE GRANULATION PLANT
PRODUCTS PROJECT SCOPE:
Plant for production of ammonium nitrate-based granulated Calcium ammonium nitrate fertilizers 385,000 (CAN) Granulated ammonium nitrate
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: Improvement of fertilizer quality as a result of applying modern mechanical granulation
INVESTMENTS 25 26 MAIN PROJECTS IN PROGRESS NITRIC ACID AND NEUTRALISATION UNITS
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, improvement in production efficiency and consumption rates (ammonia, steam yield, electricity) 27 MAIN PROJECTS IN PROGRESS COAL GASIFICATION PROJECT
RAW MATERIALS PROJECT SCOPE: Construction of hard coal gasification unit
coal Products: methanol or ammonia Estimated construction period: 36 months Location: Kędzierzyn Project carried out jointly with Tauron Polska Energia S.A. oxygen
Estimated capital expenditure: EUR 400m–600m nitrogen
KEY OBJECTIVES: Improved security of gas supplies thanks to in-house production of syngas, development of low-emission, clean coal-based technologies, development of new production capacities in the chemical and energy sectors
INVESTMENTS 27 28 MAIN PROJECTS IN PROGRESS POWER GENERATION UNIT
PROJECT SCOPE:
Construction of a new coal-fired unit
Launch of the unit: 2021 A 100 MWe coal-fired unit Integrated with the captive CHP plant Location: Puławy
Project budget: PLN 890m
PROJECT’S KEY BENEFITS:
The new unit and the upgraded captive CHP plant will provide Grupy Azoty Puławy with an energy system appropriate for its electricity and process heat requirement. 29 R&D
SELECTED R&D PROJECTS
SCOPE: OUTCOME: 3D PRINTING PA6 filaments for FDM Enhancement of the Grupa Azoty Group’s product PA6 powders for SLS portfolio Entering new markets
ORGANIC SYNTHESIS TECHNOLOGY
Enhancement of the Grupa Azoty Group’s product Developing new organic synthesis products portfolio Extension of the product chain Entering new markets Low-tonnage, high-margin products
HUMIC ACIDS
Construction of a humic acid unit Expansion of the Grupa Azoty Group’s product portfolio Addition of plant growth stimulants and Entering new markets organic fertilizers to the Grupa Azoty Group’s fertilizer portfolio FINANCING 31 GRUPA AZOTY GROUP Grupa Azoty Group financials as at September 30th 2018
PKO and bank syndicate AVAILABLE FUNDING • Revolving and umbrella credit facility (PLNm) • PLN 3,550m 3,395 • PLN 3,770m since Nov 2 2018*
EBRD 3 490 320* • Term Loan Agreement • PLN 650m 2 EIB
• Term Loan Agreement 1 0 • PLN 1,170m
Total corporate financing NET DEBT • PLN 5,370m (PLNm) Net debt/EBITDA - max 3.0x (2020–2023: max 3.5x) 766 NET DEBT Q3 2017 Q3 2018
Total debt ratio (%) 34.0 37.5 327 233 Net debt (PLNm) 608 766 Net debt/EBITDA -0.03x 0.23x 0.28x 0.97x
Net debt/EBITDA 0.53 0.97 -41 for 12 months (ratio) 2015 2016 2017 Sep 2018
* Since November 2nd, the amount of credit facilities granted under agreements and available credit limits has been approximately PLN 320m higher following the execution of a new overdraft facility agreement with PKO BP (EUR 75m), connected with physical cash pooling in the euro. STOCK PRICE 33 2018 EVENTS AND GRUPA AZOTY S.A SHARE PRICE
Share price
Initial offer to purchase COMPO 80 EXPERT shares submitted
70 2017 annual 2017 estimated performancereport Financing Agreement to Agreement agreements purchase Goat Reclassificatio 60 Q1 2018 amending credit with EBRD TopCo GmbH n to MSCI results [SERIES NAME] facility signed shares executed GLOBAL agreements with SMALL CAP PKO BP executed 50 Dividend MSCI indices paymentdate review H1 2018 results
Management Board 40 Change of 2017 annual report recommendation Credit issue date concerning dividend facility agreement with 30 H1 2018 estimated Dividend record date Goat TopCo GmbH 20 Q3 2018 acquisition estimated closed performa Q3 2018 results
10 sty 18 lut 18 mar 18 kwi 18 maj 18 cze 18 lip 18 sie 18 wrz 18 paź 18 lis 18 gru 18 34
Thank you for your attention For more information, visit www.grupaazoty.com Contact: [email protected]