Financial performance

In 2022, our revenue was up 55.1% year on year, and gross profit rose by PLN 856,582 thousand, or 27.8%, relative to 2021. Total operating profit was PLN 865,649 thousand, down 1.2% year on year.

Przychody ze sprzedaży (mln PLN)

Source: Company data

Revenue by segment

Revenue by segment

Fertilizers

In the Fertilizers segment, revenue for 2022 reached PLN 15,104 million and EBITDA margin was 9.0%.

Plastics

The Plastics segment’s revenue for 2022 amounted to PLN 2,083 million (up 13.9% year on year) and EBITDA margin stood at -2.2% (down 13.1pp year on year).

Chemicals

The Chemicals segment’s revenue for 2022 amounted to PLN 6,413 million (up 38.5% year on year), and its EBITDA margin stood at 12.1% (down 2.5pp year on year) in 2022.

Energy

Other Activities

Source: Company data.

*EBIT is calculated as operating profit/(loss) as disclosed in the statement of profit or loss, adjusted for gain on a bargain purchase.
** EBITDA is calculated as operating profit/(loss) before depreciation and amortisation, adjusted for gain on a bargain purchase.

Structure of assets

In 2022, the Grupa Azoty Group’s assets rose to PLN 25,865,644 thousand, by PLN 2,220,939 thousand relative to the end of 2021.

Structure of equity and liabilities

¹ For information on the category, see Note 22 to the consolidated financial statements of the Grupa Azoty Group for 2022.

Consolidated statement of cash flows

In 2022, the Group generated positive net cash from operating activities of PLN 5,608,373 thousand, down by PLN 176,454 thousand on 2021.

Stock Exchange

Grupa Azoty S.A.

In 2022, the price of Grupa Azoty S.A. shares was relatively volatile. Overall, it increased by more than 16% year on year, to PLN 39.5 at the year’s end.

Grupa Azoty Puławy

In 2022, the price of Grupa Azoty Puławy shares was highly volatile. Overall, it fell by more than 10% year on year, to PLN 73.4 at the year’s end.

Click the following link to view Notes to the financial statements.

All financial performance figures may also be downloaded from the Grupa Azoty Group's Performance Data Centre.

Market environment of individual segments

Agro Fertilizers

Performance of the Agro business was largely affected by highly volatile commodity prices, especially of natural gas, the demand-supply imbalance, and declines in the prices of agricultural produce. The average prices of feedstock used and products manufactured by the segment were significantly higher than the year before, while sales volumes were markedly lower.

Natural gas prices in the period under review fluctuated widely, with the TTF spot price ranging from EUR 22 to EUR 345 per MWh. Given an upward trend in natural gas prices seen in the third quarter, followed by a downward trend (in the fourth quarter), three key companies of the Grupa Azoty Group halted or cut down their production of nitrogen fertilizers between August and October 2022. Throughout the year, a demand and supply imbalance was recorded, due mostly to the economic situation in Europe in the aftermath of Russia’s aggression against Ukraine. In the fourth quarter, the fertilizer market stagnated. Producers looked forward to a market upturn and sales increase ahead of the upcoming fertilizer season, while customers were holding off on purchases in anticipation of a drop in fertilizer prices as gas prices had fallen quarter on quarter. As a result, demand declined and fertilizer stock levels held by manufacturers and distributors went up. Another reason why customers reduced their purchases were alarming signals coming from the agricultural market, especially a decline in the prices of agricultural produce fuelled by strong grain imports from Ukraine.

Plastics

The prices of benzene and phenol, the segment’s key raw materials, but also the prices of its products, were significantly higher than in the previous year. The plastics market was hit by weaker demand from almost all industries, including automotive, construction, packaging, electronics and electrical equipment, while European manufacturers struggled with the consequences of strong imports. From August to October, following a sharp increase in feedstock prices, Grupa Azoty S.A. and Grupa Azoty Zakłady Azotowe Puławy S.A. halted the production of caprolactam and polyamide 6. As a result, plastic product sales by the Grupa Azoty Group declined considerably relative to the previous year.

Chemicals

The Chemicals business saw an increase in the prices of all its products and almost all production inputs. In the case of products, the highest price growth, exceeding 100% year on year, was recorded for ammonia water, NOX, PULNOx, and technical grade urea. Sales volumes dropped year on year across virtually all product categories, except for sulfur and ammonia water, with the steepest decline recorded for melamine and OXO alcohols. Key determinants of the segment’s performance included the growing feedstock prices and relatively weak demand, as European manufacturers came under heavy competitive pressure from products imported from non-EU markets. The melamine market was affected by high feedstock prices and the expiry of anti-dumping duties on melamine imports from China to the European Union. Melamine production at Grupa Azoty Zakłady Azotowe Puławy S.A., halted in July 2022, was partially resumed at the end of October 2022. In the last quarter of the year, the market also kept a close eye on the possible impact of an increase in China’s export capacity reflecting a production recovery after the lifting of measures introduced in that country under the zero COVID policy. 

Energy

Natural gas 

In early 2022 gas prices in Europe were close to EUR 80/MWh, however Russia’s invasion of Ukraine led to their sudden hike. An all-time high of EUR 345/MWh was recorded on March 7th 2022. As soon as the market got used to the instability, the price of gas fell reflecting a lower risk premium component. In addition, due to favourable weather conditions and substantial LNG supplies, gas stocks were growing faster than the long-term average, supported by the EC work on regulations requiring EU member states to fill up their storage facilities before the winter season.

Following an announcement that restrictions on gas exports from the US would be lifted, the prices dropped by 50%. Storage facilities in the EU were filled to more than 90% by early October, resulting in local oversupply of gas and price declines. In October, the prices fell below EUR 30/MWh. Starting from November, the prices varied with the weather, while Russia’s share in total supplies to the EU did not exceed eight percent. Reports of possible delays in the launch of the Freeport LNG terminal in the US, coupled with news about incidents on Norwegian fields, low temperatures, and low wind levels, pushed gas prices back up, to EUR 150/MWh. Such weather conditions, conducive to higher demand for gas, continued until mid-December. 

Over the last weeks of the year, gas prices declined due to revised weather forecasts and record-high LNG supplies. In parallel with the dip in demand, gas withdrawal from the nearly full storage facilities fell significantly. In some EU countries, gas was even injected into storage – an unprecedented situation considering the season of the year. The market concluded there would be no gas shortages during the ongoing winter. As a consequence, gas prices hovered close to EUR 70/MWh at the year’s end. 

Prices of natural gas

* Excluding transmission.

Coal

According to IHS Energy, the average ARA coal price in the reporting period was approximately USD 279/tonne² , up 133% year on year. According to analysts, the price of coal in 2023 will be around USD 210/tonne.

The main reason behind the price trends was the supply crisis triggered by Russia’s invasion of Ukraine and significant risk of failure to maintain uninterrupted supplies of energy commodities. Situation in Europe was strongly affected by an embargo imposed on Russian coal supplies, which took effect on August 10th 2022. European energy producers diversified their supply sources relying on higher imports from South Africa, Australia, and Colombia, which expanded the range of available coal types.

In late 2022, sentiment on the international coal market stabilised.

² Coal price for calorific value of 6,000 kcal.

Prices of hard coal

Electricity

The weighted average BASE price of electricity on the Day-Ahead Market was PLN 796/MWh in 2022, up 98% year on year. Domestic consumption fell 4% year on year, with slightly higher production. Poland maintained its position as an electricity exporter.

In the first half of 2022, electricity prices grew at a moderate pace (lower than in the second half of 2021). This was due mainly to higher prices of CO₂ emission allowances, volatile demand, a shift in the structure of generation sources, weather conditions, and cross-border capacities.

In the third quarter of 2022, we saw a sharp rise in electricity prices – by 274% year on year. Several factors were at play, such as windless and dry months, low water levels restricting the capacity of hydropower plants, maintenance shutdowns of some NPP units in France and Germany, persistently high prices of CO2 emission allowances, and growing prices of basic fuels – gas and coal – in the wake of Russia’s aggression against Ukraine.

In the fourth quarter of 2022, the average prices of electricity decreased by 30% year on year as a consequence of curbed demand following production stoppages and government interventions aimed at improving situation on the electricity market (e.g. with respect to fuel imports or caps imposed on producer margins and prices).

Electricity prices

* IRDN − average price weighted by the volume of all transactions on a trading day, calculated after the delivery date for the entire day.

Cost of raw materials

In total, the cost of raw materials increased by PLN 7,676 million, which reflected a PLN 8,663 million change in the prices of key raw materials offset by a PLN -1,624 million decrease in volumes. 

The steepest growth in raw material costs was recorded in the case of natural gas, which surged by approximately 125% year on year, energy carriers – electricity and coal, up by approximately 23% and 16%, and minerals – potassium chloride and phosphate rock, up by 120% and 61%, respectively (cost of consumption by the Grupa Azoty Group).

In 2022, gas accounted for 57.8% of the total cost of raw materials consumed by the Group, up by 13.1pp year on year. 

The Grupa Azoty Group’s financial condition is sound – the parent, subsidiaries, and associates remain fully solvent with a good credit standing. The parent partly relies on external sources of liquidity, such as umbrella facility agreements to secure its current liquidity needs, and corporate financing agreements, including long-term agreements, concluded in accordance with the Strategy. The parent and its subsidiaries have also entered into physical cash pooling arrangements in PLN, EUR, and USD to finance cash deficits of the scheme’s participants with cash surpluses generated by other companies. As a result, liquidity risk remains low even in the event of a short-lived macroeconomic downturn. The parent also has an option to postpone the payment of its liabilities and has entered into factoring agreements as an additional liquidity management tool. 

In 2022, no material adverse impact of the COVID-19 pandemic on the Group’s business was identified. 

The parent’s growth in 2023 will depend largely on the prices of its key raw materials, especially natural gas, and the ability to generate positive margins on key products sold domestically and on foreign markets. Its future financial performance will also be affected by the USD and EUR exchange rates as well as conditions prevailing in agriculture and other end user sectors. The parent intends to consistently pursue its financial and investment objectives outlined in the Strategy so as to ensure the target level of ROI for its investors.

The Grupa Azoty Group’s financial position remains stable. Additional sources of liquidity include: 

• cash, which stood at PLN 1,379 million as at December 31st 2022, including cash held as bank deposits, 
• PLN 5,579 million in undrawn credit facilities as at December 31st 2022, 
• available reverse factoring limits of PLN 1,441 million. 

Cash and amounts available under the financing facilities totalled PLN 8,399 million as at December 31st 2022.

Net Debt Bridge

Currency structure of GRUPA AZOTY Group’s borrowings

as at Dec 31 2021

In 2022, our total capital expenditure amounted to PLN 2,746.3 million, having increased by 7% year on year.

The Grupa Azoty Group has several ongoing investment projects, of which the largest one is Polimery Police. The total value of the project is PLN 7,211 million, of which PLN 4,640 million has already been spent, including PLN 1,533 million in 2022. Progress on the project, scheduled for completion in 2023, has reached 99%. As part of the Polimery Police project, the Group plans to launch a propylene dehydrogenation plant (PDH) and a polypropylene production plant with associated infrastructure (including expansion of the Police Seaport to include a propane and ethylene handling and storage terminal).

³COMPO EXPERT Group, Grupa Azoty KOLTAR, Grupa Azoty SIARKOPOL, Grupa Azoty PKCh, Grupa Azoty COMPOUNDING, Grupa Azoty ATT POLYMERS.

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