Release Date: September 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Grupa Azoty SA improved its EBITDA by over PLN800 million compared to the previous year, reflecting significant recovery efforts.
- The company has increased its sales volumes across all production segments, indicating a positive response to its recovery program.
- Cost-cutting measures have been effective, with fixed costs reduced by PLN70 million and overall costs down by 13% compared to the previous year.
- Grupa Azoty SA has signed agreements with four financial institutions to stabilize its financial situation, with more agreements in the pipeline.
- The company is actively exploring new markets, such as Ukraine and Scandinavia, to expand its sales and distribution network.
Negative Points
- Grupa Azoty SA is still facing significant financial challenges, with a negative EBITDA of minus PLN179 million and a negative EBITDA margin of 2.7%.
- The company is burdened with over PLN10 billion in debt, making it one of the most indebted organizations in Poland.
- There is a high dependency on external factors such as low wheat prices and increased fertilizer imports, which negatively impact the company's performance.
- The technical condition of the company's plants is poor, limiting production capacity and requiring significant investment for repairs and upgrades.
- The company has faced difficulties in securing long-term agreements with banks and financial institutions, which are crucial for its recovery and restructuring efforts.
Q & A Highlights
Q: Are you considering selling the entire package in Polimery Police or just a part of it? Would selling all of it allow you to avoid issuing new shares?
A: We are not preparing a share issue related to polymers. We are looking for partners for the Polimery Police project, considering options such as a capital partner, a technical operations partner, or a partner with raw materials like propane. We will analyze options with Orlen over the next two months, keeping all possibilities open, including increasing shares or polymers not being part of Azoty Group.
Q: How much money is still needed for the polymer project? Hyundai expects another EUR115 million. Is this the total remaining budget?
A: We cannot provide a specific figure at this stage. Annex number 5 will be a turnkey solution to our situation with the contractor, Hyundai. Once negotiations are complete, we will communicate the reasonable scenario.
Q: With current prices and after cost-cutting, can the fertilizer business be profitable in the fourth quarter and first quarter?
A: We avoid forecasting, but we have stated that this year will be challenging, implying that we do not expect very positive results.
Q: Regarding CBAM regulations, how much investment is needed to keep the fertilizer business viable long-term? Are reductions in production capacities expected due to geopolitical differences in raw material prices?
A: We are exploring various options, including logistical solutions like importing green ammonium, as investment costs are high. We are analyzing partnerships for ammonia supply from regions like Africa, the Middle East, and the US. The new regulations will take effect in 2026, and we are preparing for them without considering reducing volumes.
Q: Are there any conditions that could prevent you from selling your shares in PDH, such as objections from the Korean shareholder?
A: No, there are no such conditions that would prevent us from selling our shares in the project.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
