“Revenue by key businesses increased substantially in the Chemicals segment, which was attributable to the low base effect resulting from only partial recognition of Siarkopol’s revenue in 2013 (it began to be consolidated in Q4). Revenue in the key Fertilizers and Plastics segments remained broadly flat on the previous year. By geographies, we reported a 3% increase in the share of exports in total revenue. While this translated into increased selling and distribution expenses, it also allowed us to deliver relatively higher margins, particularly on USD-denominated transactions in Q4,” said Andrzej Skolmowski, Vice-President of the Grupa Azoty Management Board.

2014 CONSOLIDATED REVENUE STRUCTURE

 
Looking at the performance and margins of individual businesses, the Fertilizers Segment remains the main driver of the Group’s profitability. Year on year, the EBITDA margin remained stable at close to 11%, largely on the back of cost savings in the procurement of key raw materials (natural gas, phosphate rock and potassium chloride) and energy. This allowed us to mitigate the effect of lower prices across almost all product categories (mainly urea, ammonium sulfate and NPK fertilizers), and to cover the necessary selling and distribution expenses associated with the increased share of export sales.

With comparable revenue, selling and distribution expenses, and administrative expenses, the Plastics Segment delivered a higher margin, which improved from -8% to -2%. The improvement resulted chiefly from enhanced production and higher sales volumes at a lower cost of energy.

Despite higher revenue (full recognition of Siarkopol’s sales), the Chemicals Segment posted a lower EBITDA margin, which declined to PLN 45m from PLN 71m in 2013. The decline was attributable mainly to the recognition in Q4 of an impairment loss on Grupa Azoty ZAK’s assets of PLN 40m. Net of this item, the segment’s EBITDA margin actually increased, thanks to lower costs of raw materials and better pricing terms for exported prilled sulfur.

Grupa Azoty’s investments in 2014

The Group’s total capital expenditure in 2014 was PLN 572m, with PLN 237m allocated to business development projects and PLN 179m to business continuity projects. In 2014, mandatory investments amounted to PLN 89m and purchases of finished goods to PLN 66m.

Structure of capital expenditure in 2014
 

At Grupa Azoty S.A. (the Parent), 2014 saw the launch of two major capex projects − the Polyamide Plant II 80 thousand t/y project (total capex: PLN 320m) and the Granulation Plant project (PLN 141m).

Among the key capex projects at Grupa Azoty Puławy S.A. was a unit for production of liquid fertilizers based on urea and ammonium sulfate (total capex: PLN 69.5m) and an ammonia storage facility (PLN 108.5m) (both projects were completed). In addition, the company was constructing a unit for production of solid fertilizers based on urea and ammonium sulfate (PLN 98m incurred in 2014, out of PLN 137.5m) and expanding its network of UAN tanks.

Grupa Azoty Police’s key investment projects in 2014 included: upgrade of ammonia synthesis reactors (PLN 10.5m incurred in 2014, out of PLN 24m) and expansion of the post-calcination gas desulfurisation system through the addition of two new reactors (PLN 3.9m, out of PLN 8.8m).

The major projects at Grupa Azoty ZAK S.A. in 2014 included stage 1 of a new CHP Plant (PLN 61m incurred in 2014, out of the total capex of PLN 375m).
 

Grupa Azoty Puławy Group’s consolidated results

In 2014, Grupa Azoty Puławy earned a net profit of PLN 225m (2013: PLN 305m), on revenue of nearly PLN 3.7bn (2013: PLN 3.8bn).

Grupa Azoty Police Group’s consolidated results

In 2014, Grupa Azoty Police earned a net profit of PLN 61m (2013: PLN 45m), on revenue of PLN 2.4bn (2013: close to PLN 2.5bn). 

 
Grupa Azoty Zakłady Azotowe Kędzierzyn’s consolidated results
On a consolidated basis, Grupa Azoty Zakłady Azotowe Kędzierzyn earned a net profit of PLN 111m in 2014 (PLN 78m following recognition of the impairment loss), up from PLN 85m in the previous year, on revenue of nearly PLN 2.1bn (relatively flat year on year).