Poland's ZAT fertilizer sales hit by prospect of gas tariff cut

22 March 2013 13:53  [Source: ICIS news]

LONDON (ICIS)--Falling fertilizer sales at Polish chemical group Zaklady Azoty Tarnow (ZAT) are a result of buyers' delayed purchases, in expectation that a substantial gas tariff cut will soon feed through into prices, ZAT said on Friday.

ZAT's fertilizer division saw its sales revenues decline to zloty (Zl) 932.4m ($287.8m, €222.5m) in the fourth quarter of 2012, from Zl1.0bn in the preceding quarter and Zl1.3bn in the same quarter of 2011.

Headwinds – partly caused by the delayed sales – meant the division’s Q4 operating profit fell to Zl6m, from Zl59.7m in the third quarter of 2012 and Zl157.3m in the fourth quarter of the previous year.

Buyers are counting on a deal on a gas pricing formula – struck last November by predominant Polish gas distributor PGNiG and Russian gas exporter Gazprom – triggering industrial gas price cuts that will lower the cost of fertilizers made in Poland, ZAT noted.

Investment bank WOOD & Company estimated that gas feedstocks account for 23% of ZAT’s cost of goods sold.

Meanwhile, looking at the latest performance of its caprolactam (capro) division, ZAT reiterated recent comments that a build-up of capro capacity in China last year was impacting on profitability.

The company’s management was working on a plan to lengthen the capro value chain by using more of ZAT's capro in the processing of the firm's own products, particularly polyamide 6 (nylon 6), the company said.

ZAT has switched to the name Grupa Azoty for marketing purposes, in advance of formalising a group of that name which is being created in a merger and consolidation process.

($1 = €0.77, $1 = Zl3.24, €1 = Zl4.19)

By: Will Conroy
+44 20 8652 3214

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index