Poland's ZAT identifies Grupa Azoty capital expenditure savings

22 January 2013 11:01  [Source: ICIS news]

LONDON (ICIS)--Newly-formed Grupa Azoty will enjoy capital expenditure (capex) savings of zloty (Zl) 200m ($63.9m, €48.0m) thanks to the cancellation of urea and urea ammonium nitrate (UAN) investments that will become unnecessary, Poland's Zaklady Azoty Tarnow (ZAT), which is creating the group, said on Tuesday.

The capex, which was earmarked for ZAT subsidiary Zaklady Chemiczne Police (ZChP), would no longer be required following the successful takeover of fertilizer, melamine and caprolactam (capro) producer Zaklady Azotowe Pulawy (ZAP), it added.

ZAT said it was setting up a joint consolidation team to identify potential synergies that would be unlocked by merging ZAT, ZAP and their subsidiaries to establish Grupa Azoty, which will be Europe's second largest fertilizer producer behind Norway-based Yara International.

Once the merger was finalised the synergies could reach as much as Zl 200m from areas including greater purchasing power in energy and logistics, and joint sales, according to ZAT chief financial officer Andrzej Skolmowski.

In a note to investors on ZAT's synergies forecasting, analyst Piotr Drozd of investment bank WOOD & Company said that “while we agree that this figure is achievable, we would expect such synergies to surface only gradually and be weighted towards 2014, 2015 and beyond”.

“We expect 2013 to be a year of reorganisation and optimisation for the group, and assume only marginal cost savings,” he added.

Although the establishment of Grupa Azoty is yet to be formalised, ZAT is already using the brand name for marketing purposes.

($1 = €0.75, $1 = Zl 3.13, €1 = Zl 4.17)


By: Will Conroy
+44 20 8652 3214



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