INVESTOR PRESENTATION Y2019 April 2020
2 GRUPA AZOTY AT A GLANCE KEY DATA FINACIAL RESULTS Y2019 PLNm MARKET PLN 3.071 bn* CAPITALISATION REVENUE 11 308 SHARES EBITDA 1 424 99,195,484 shares NET PROFIT 408 min/max price 6 PLN -113 PLN GRUPA AZOTY GROUP WSE: WIG30, mWIG40, WIG- 4 locations of main production plants STOCK CHEMIA, WIG30, mWIG 40, INFORMATION WIG, WIG-Poland 60 group companies FOREIGN INDEXES: approximately 15,000 employees MSCI, FTSE, CEEplus EU’s No. 2 in mineral fertilizers ESG: WIG-ESG, MSCI ESG FTSE4GOOD EU’s No. 3 in PA6 *data as of 1st January 2020
3 GRUPA AZOTY AT A GLANCE OWNERSHIP STRUCTURE STATE TREASURY - Government of Poland Other - Represented by the Chancellery 25.75% of the Prime Minister TFI PZU S.A. Opansa 8.60% TFI PZU S.A. Enterprises Limited - Financial investor Norica 9.51% indirectly 19.82% Rainbee ING OFE (NN OFE) Holdings - Financial investor ING OFE Limited 9.96% 9.90% NORICA HOLDING S.À. R.L. Norica Holding S.à.r.l. - Subsidiary of Acron and Mr. Viatcheslav State 0.41% Kantor Treasury 33.00% - Shareholder since 2012 - Norica and its subsidiaries hold 19.82% of shares Free float – 28.62 % Based on official notifications received by the Company
4 GRUPA AZOTY AT A GLANCE CORE BUSINESS Grupa Azoty Police NPK, Urea, Fosfory Ammonia, TiO2 NPK Grupa Azoty Grupa Azoty Puławy ATT Polymers N Fertilisers, PA6 Melamine, Urea, CPL Compo Expert Grupa Azoty Siarkopol Speciality Fertilisers Sulphur Grupa Azoty S.A. Parent Company PA6, Compounding, NS Fertilisers Compo Expert Spain Speciality Fertilisers Grupa Azoty Z.A. Chorzów Productions plants Kędzierzyn NPK N Fertilisers, Urea OXO Products
5 GRUPA AZOTY AT A GLANCE 18 GROUP’S BUSINESS BY GEOGRAPHY 2019 REVENUE EUR POLAND 50% PLNm 3,897 EU WORLD Asia 35% 743 4% 1,114 North America 3% 274 166 180 214 201 187 1,260 1,009959 1 3 46 25 60 1 2 65 South America 231 223 3% 45 110 121 7 20 7 73 Other Europe 7 4% 21 10 3% 2% Africa REVENUE ANALYSIS 2019 1% Agro Fertilizers 23% 46% Grupa Azoty Compo Expert Plastics 13% Chemicals Production Energy 13% Sales representative Stabilisation units Logistics Other plants offices
IMPACT OF COVID-19
IMPACT OF COVID-19 7 EFFECT OF PANDEMIC ON CHEMICAL INDUSTRY Agricultural market The COVID-19 pandemic had no significant impact on the crop segment of Poland’s agriculture. Fertilizers - Poland The COVID-19 pandemic had no significant impact on the Fertilizer segment in Poland. Fertilizers - other countries Except temporary logistics constraints of local nature, the COVID-19 pandemic had no significant impact on the fertilizer segment in the EU. Polyamide Record-high price declines in polyamide 6. Increased demand from the food packaging and healthcare sectors. Melamine Oversupply on Asian markets. Demand is still low due to the pandemic. OXO ALCOHOLS Demand expected to pick up in Q3 2020. Very low crude oil prices expected to keep in check any meaningful increase in product prices. Titanium white There has been no reduction in the supply of titanium white in Europe, while the demand is strongly affected by the measures taken in response to the spread of coronavirus. Natural gas Record-high winter temperatures in Europe. Subdued demand due to the COVID-19 epidemic.
IMPACT OF COVID-19 8 IMPACT OF THE PANDEMIC ON THE GRUPA AZOTY GROUP’S BUSINESS IDENTIFIED RISK AREAS: MITIGATING MEASURES: Disruptions in feedstock supply chains and in close monitoring of sales, trading partners’ position and sale of products due to disruptions in transport collection of receivables implementation of crisis management rules, particularly in maintenance and investment activities Risk of temporary disruptions in timely delivery of capital and maintenance projects cooperation with public administration to develop appropriate regulations to mitigate adverse economic Disruptions in continuity of production consequences of COVID-19 pandemic processes due to potentially reduced availability of workforce GDP CHANGES AS FORECAST BY EC Risk of deteriorated liquidity faced by some trading partners due to payment backlogs -4.3% -6.1% Exchange rate volatility -6.2% -7% -7.2% -7.9% Possible risks of sales disruption in individual segments -8.2% -9.7% Source: European Economic Forecast Spring 2020
IMPACT OF COVID-19 9 MEASURES TAKEN IN RESPONSE TO THE CORONAVIRUS EPIDEMIC Donation of PLN 3,200,000 to institutions and entities which combat COVID-19 (PLN 750,000 from Grupa Azoty S.A., Grupa Azoty ZAK S.A., Grupa Azoty Zakłady Chemiczne Police S.A. and PLN 950,000 from Grupa Azoty Zakłady Azotowe PUŁAWY S.A.); Free-of-charge lend of 40 company cars to healthcare establishments for the purpose of combating the epidemic. Manufacture of biocidal decontaminant by Grupa Azoty Zakłady Azotowe PUŁAWY S.A., based on hydrogen peroxide (4.9%), authorisation from the Office for Registration of Medical Devices and Biocidal Products; Manufacture of “safe gloves” with antiviral properties, covered with a layer of silver; Donation of Tarfuse filaments for the #DrukarzeDlaSzpitali initiative (3D printing of protective mask and goggle components) and the VentilAid project, a Polish ‘last chance’ ventilator (on the open source basis); PLN 300,000 donations from Hyundai Engineering to purchase ventilators for hospitals in Police
FINANCIAL PERFORMANCE
11 FINANCIAL PERFORMANCE RESULTS OF THE GRUPA AZOTY GROUP REVENUE NET PROFIT (PLNbn) (PLNm) 11,3 10 9,6 9 489 408 315 8 2016 2017 2018 2019 2016 2017 2018 2019 ADJUSTED EBITDA EBITDA BY SEGMENTS (PLNm) (PLNm) 965 12% 13% 11% 8% 541 1529 484 348 301 282 1034 221 1262 777 208 192 -28 82 66 2016 2017 2018 2019 2016 2017 2018 2019 ADJ. EBITDA EBITDA MARGIN AGRO FERTILIZERS CHEMICALS PLASTICS
12 FINANCIAL PERFORMANCE AGRO FERTILIZERS RESULTS PRODUCTION CAPACITIES Yara (PLNm) 2018 2019 Y/Y CHANGE Grupa Azoty Segment 4,904 6,716 37% revenue No. 2 Borealis in EU 82 965 1,077% Agrofert EBITDA Eurochem 2% 14% EBITDA margin Fertiberia No. 1 Achema JSC in Poland PRODUCT CATEGORIES Nitrogenmuvek Rt. Groupe Roullier Azomures S.A. Nitrogen-sulfur Compound fertilizers [tt] fertilizers 0 5 000 10 000 15 000 11% 30% Source: Fertilizers Europe Nitrogen fertilizers Specialty and ammonia fertilizers 39% 20%
13 FINANCIAL PERFORMANCE CHEMICALS PRODUCT CATEGORIES RESULTS OXO alcohols (PLNm) 2018 2019 Y/Y CHANGE Plasticizers 18% 8% Segment 3,114 2,639 -15% revenue Other 282 208 -26% EBITDA 22% 9% 8% EBITDA margin Titanium Urea white (technical grade) 13% 22% Melamine 17% No. 5 No. 4 PLASTICIZERS MELAMINE No. 3 OXO ALCOHOLS in EU PRODUCTION in EU in EU CAPACITIES OCI Melamine BASF ExxonMobil Borealis Group BASF Oxea Group Evonik Ineos Grupa Azoty Polynt Grupa Azoty Grupa Azoty BASF SE Deza Perstorp OXO Azomures S.A. Perstorp OXO AB Oltchim SA Valtris 0 50 100 150 200 0 200 400 600 0 100 200 300 400 500
14 FINANCIAL PERFORMANCE PLASTICS RESULTS PRODUCTION CAPACITIES POLYAMIDE 6 2018 2019 Y/Y CHANGE (PLNm) BASF Segment 1,562 1,456 -7% revenue Lanxess 192 66 -66% Grupa Azoty EBITDA Aquafil No. 3 12% 5% EBITDA margin in EU DSM Radici Domo Ube PRODUCT CATEGORIES No. 1 Rhodia in Poland Beaulieu Nurel 0 50 100 150 200 250 300 Natural polyamide 86% Source: PCI Nylon, YellowBook 2018 Integrated Modified polyamide 6% Caprolactam 8%
15 FINANCIAL PERFORMANCE ENERGY COMMODITIES ELECTRICITY PRICES We expect the downward trend to continue. 280 The Grupa Azoty Group companies have secured the required volumes under their 230 contracts. 180 We are awaiting decisions about reliefs under the Capacity Market Act. Regulations on 130 the amount of charges come into force as of October 1st 2020, already accounted for Electricity (IRDN) in the 2020 budget. PLN/MWh We expect prices to continue at recent levels. In Poland, the supply exceeds the PRICES OF HARD COAL demand in both the producer and the customer segments of the market. 90 The Group companies are parties to long-term contracts securing the required volumes. 70 Deliveries are made as planned. 50 In mid-year, the EC plans to start its revision of the Community framework for the USD/t 30 Hard coal ARA prices taxation of energy products. The long-term growth trend initiated in Q3 2017 is in the correction phase. CO 2 PRICES [Q/Q] 27 The number of emission allowances held by the Grupa Azoty Group companies is 22 17 sufficient to cover their CO 2 emissions for 2019. 12 EUR/t 7 The EC continues to work on the European Green Deal which will enforce emission 2 reductions and reduce the allocation of free emission allowances. EEX 40% year-on-year decline in the average quarterly gas prices according to Gaspool data NATURAL GAS PRICES 120 High stock levels maintained in case transit through Ukraine is suspended 100 80 60 Significant increase in LNG supply on the global market 40 20 Low gas prices in Asia – Europe more favourable to LNG suppliers from the Atlantic PLN/MWH region. GPL* Gas - PPX* * Excluding transmission.
16 FINANCIAL PERFORMANCE FEEDSTOCK COST ANALYSIS FEEDSTOCK CONSUMPTION BY GRUPA AZOTY GROUP Other Gas 31% 24% Energy 11% Benzene 3% Propylene 6% Fine coal Potassium 6% chloride 8% Phosphate rock Phenol 6% 5%
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