Poland’s Azoty Q3 profit falls 33% on plastics, chemicals but fertilizers stay afloat

LONDON (ICIS)–Grupa Azoty’s third-quarter net profit fell nearly 33% year on year to Polish zloty (Zl) 41m ($10.8m) on the back of negative margins at its plastics division, the Polish producer said on Thursday.

Azoty (Zl/m)	Q3 2020	Q3 2019	Change
Revenue	2,416	2,564	-5.77%
Net profit	41	61	-32.8%
EBITDA*	250	332	-24.7%

*Earnings before interest, taxes, depreciation, and amortisation

Key points:

– The fertilizers business posted Q3 sales at Zl 1.44bn, down from Zl 1.52bn a year ago; the EBITDA margin managed to stay afloat, however, only down by  0.3 percentage points (pp) to 13.8%.

– Relatively low prices for key feedstock natural gas helped maintain margins at the division, said Azoty.

– Plastics Q3 sales stood at Zl 245m, down Zl 93m year on year, while the EBITDA margin stood at a negative -3.3%, down 5.2pp year on year.

– Q3 chemicals sales fell 6.6% year on year to Zl 612m, with the EBITDA margin staying barely in the positive at 0.1%, down by 5.8pp from Q3 2019.

– The chemicals segment posted the largest reductions in selling prices in oxo-alcohols and melamine due to a decline in demand from the furniture industry, Azoty said.

– “We are pleased with the stability of the key fertilizer segment in which we increased sales and maintained a high EBITDA margin of over 10%, which we owe to relatively low gas prices,” said Azoty’s CEO Mariusz Grab.

– “The remaining segments were strongly influenced by the development of the [coronavirus] pandemic, which contributed to a zero margin in chemicals and a negative margin in plastics, and this situation may continue until key global economies return to the path of economic growth.”

Outlook:

– Due to impacts from the pandemic, Azoty has extended the implementation schedule for its planned world-scale propane dehydrogenation (PDH) and polypropylene (PP) plants by three months; payments to the contractor were increased by €33m as a consequence, the company said.

– However, Azoty said the investment will be completed in the first quarter of 2023 as planned.

($1 = Zl 3.79)