Investment bank downgrades its rating for Poland’s ZAT to ‘Hold’

25 January 2013 11:51  [Source: ICIS news]

LONDON (ICIS)--WOOD & Company has downgraded its rating on the stock of Polish chemical group Zaklady Azoty Tarnow (ZAT) to ‘Hold’ from ‘Buy’ saying it believes its growth “is running low on fuel at the current juncture”, the investment bank said on Friday.

“Having cleared the regulatory hurdles and received unconditional clearance from the European Commission to acquire its rival Zaklady Azotowe Pulawy (ZAP), ZAT now emerges not only as a heavyweight competitor in the European fertiliser market, but also as a sizeable newcomer to a wider investor space,” said Piotr Drozd, an analyst at WOOD & Company.

“As the process of seeking and exploiting cost and revenue synergies is bound to take time, we assume only a marginal positive effect in 2013 but expect ZAT’s greater negotiating power and group fine-tuning to bear fruit in 2014,” he added.

ZAT management’s cautious guidance on cost optimisation in 2013 suggested that the savings from the takeover and merger were “not low-hanging fruit” and should be expected only in 2014, Drozd said.

The ZAT group would this year face soft global fertiliser demand, as well as increased market supply and depressed margins on chemicals, the analyst added.

ZAT has stated that it will conduct a “merger of equals” with ZAP to form Grupa Azoty, set to be Europe’s second largest fertilizer producer behind Norway’s Yara International.

The Grupa Azoty name is already used by ZAT for branding purposes.


By: Franco Capaldo
+44 (0)20 8652 3214



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