presentation of q1 2020 results may 21st 2020 · q1 2017 q2 2017 q3 2017 q4 2017 q1 2018 q2 2018 q3...

PRESENTATION OF Q1 2020 RESULTS

May 21st 2020

2

CONSOLIDATED REVENUE

- PLN 261m (7.8%) less than in Q1 2019

- PLN 1,927m revenue in the Fertilizers segment, with Compo Expert's share at 25%

CONSOLIDATED NET PROFIT/(LOSS)


CONSOLIDATED EBITDA


- EBITDA margin at 15.3% (2.8 pp down on Q1 2019)

GRUPA AZOTY GROUP – CONSOLIDATED FINANCIAL INFORMATION

Q1 2020 FINANCIAL RESULTS

3,104

(PLNm)

476

196

3 KEY DEVELOPMENTS

BUSINESS SEGMENTS DURING THE PANDEMIC

PLASTICS

FERTILIZERS

CHEMICALS

- lower prices of all products

- benzene and phenol prices increased by 20% (then fell after collapse of oil prices)

- no signs of demand recovery from the automotive industry

- lower prices of melamine (20%), OXO alcohols (15%) and technical urea (12%)

- higher prices of sulfur (6%) and other urea solutions (4%)

- higher volumes of sales of OXO (12%) and technical urea (8%), lower volume of sales of

sulfur (40%)

- pandemic concerns spurred farmers’ purchasing decisions

- 5% increase in sales volume

- gas prices down 40% relative to Q1 2019

4

Donation of PLN 3,200,000 to institutions and entities which combat COVID-19 (PLN

750,000 from Grupa Azoty S.A., Grupa Azoty ZAK S.A., Grupa Azoty Zakłady

Chemiczne Police S.A. and PLN 950,000 from Grupa Azoty Zakłady Azotowe PUŁAWY

S.A.);

Free-of-charge lend of 40 company cars to healthcare establishments for the

purpose of combating the epidemic.

Manufacture of biocidal decontaminant by Grupa Azoty Zakłady Azotowe PUŁAWY

S.A., based on hydrogen peroxide (4.9%), authorisation from the Office for

Registration of Medical Devices and Biocidal Products;

Manufacture of “safe gloves” with antiviral properties, covered with a layer of

silver;

Donation of Tarfuse filaments for the #DrukarzeDlaSzpitali initiative (3D printing of

protective mask and goggle components) and the VentilAid project, a Polish ‘last

chance’ ventilator (on the open source basis);

PLN 300,000 donations from Hyundai Engineering to purchase ventilators for

hospitals in Police

MEASURES TAKEN IN RESPONSE TO THE CORONAVIRUS EPIDEMIC

KEY DEVELOPMENTS

5 KEY DEVELOPMENTS

Project schedule not affected by COVID-19 pandemic

December 23rd 2019 – issue of FNTP to the general contractor;

January 7th 2020 – handover of the construction site to the general contractor;

March 30th 2020 – commitment letters with 11 banks and institutions on USD 1.075bn debt financing

Debt financing agreement nearly finalised

ISB News – distinction under the category 'Most Reliable in the Fuel and Chemical Sector'

POLICE POLYMER PROJECT

6 KEY DEVELOPMENTS

NEW PRODUCTS AND TECHNOLOGIES

LAUNCH OF SALE OF 3D PRINTING MATERIALS

SPECIALISED FERTILIZER OFFERING BY GA CHORZÓW

PROJECTS ON THE LIST OF NCBiR-RECOMMENDED INITIATIVES

- R&D programme began in 2017

- FDM technology filaments based on PA6 polyamide manufactured by GA

- Online retail store to launch soon

- Research into SLS printing powders and SLA and DLP polymers

- Total amount of co-financing PLN 20m

- Grupa Azoty PUŁAWY, GA POLICE and Łukasiewicz-INS’s projects third on the list

- Modern fertilizer formulae: functional additives, polymer coating

- Technologies for optimum use of intermediate products and waste products

- successful restructuring of the company

- development of compound fertilizers based on potassium nitrate and calcium nitrate

- AZOPLON fertilizers for foliar feeding of crops, fruit and vegetables

- FERTIPLON fertilizers intended mainly for cultivation under cover

8

GRUPA AZOTY GROUP’S PROJECTS RECOMMENDED BY NCBIR FOR POIR CO-FINANCING (2020)

1. Grupa Azoty PUŁAWY + Grupa Azoty POLICE + Łukasiewicz-INSEnvironmentally friendly slow-release fertilizers

Project value: PLN 5.80mCo-financing: PLN 3.82m

2. Grupa Azoty S.A. Specialist ammonium nitrate fertilizer productswith functional additives


3. Grupa Azoty ZAKDevelopment of technology for production of high-purity neopentyl glycoland hydroxipival aldehyde oxime with the use of low-value intermediate product and waste hydrogen stream.


4. Grupa Azoty ZAKDevelopment of innovative process to obtain a range of ester for ionic liquid catalyst


RESEARCH AND DEVELOPMENT

9 RESEARCH AND DEVELOPMENT

1. Grupa Azoty PUŁAWY

Strengthening R&D&I potential (POIR/NCBiR)

2. Grupa Azoty ZAK

GA ZAK Innovation Centre (POIR/NCBiR)

3. Grupa Azoty ZAK

Specialist ammonium nitrate compound fertilizers

containing additional ingredients (POIR/NCBiR)

4. Grupa Azoty Police

Development of new type of liquid fertilizers

based on phosphorous raw materials of sedimentary origin (POIR/NCBiR)

5. Grupa Azoty S.A.

Development of new generation catalyst for low-temperature

hydrogen and syngas production process (POIR/NCBiR)

6. Grupa Azoty S.A.

Co-funding for three start-ups in IMPACT_POLAND 2.0 (PARP)

7. Grupa Azoty S.A.

Co-funding for two start-ups in the KPT ScaleUp programme (PARP)

External funds for R&D&I projects in 2019

PLN 20.57m

PLN 9.6m

PLN 2.49m

PLN 6.58m

PLN 0.63m

PLN 0.75m

PLN 0.5m


CURRENT R&D PROJECTS

TOTAL: 81 PROJECTS (as at May 2020)


PROJECT PORTFOLIOS


BUDGETS

External funding ca. PLN 40m

Total budget ca. PLN 170m


1. 3D printing – product innovation

2. Vacuum coating – product innovation

OWN PROJECTS: EXAMPLES

PA6 filaments for FDM

Project launched in 2017

- March 2020 – product commercialised

- May 2020 – launch of online store

SLS powders

Advanced research to obtain SLS powders from PA 6

and other structural polymers

Launch of vacuum metal and non-metal

coating unit

Physical vapour deposition technology

offers a number of advantages over competing solutions.

Work on new types of coatings, e.g. biocidal coatings.


SCALE UP

Grupa Azoty S.A. 's participation as Technology Recipient in two projectsimplemented by: Krakowski Park Technologiczny, Funding Box

More than 15 accelerated start-ups in both programmes

Implementation: Jan 1 2019 – Dec 31 2021

COOPERATION WITH START-UPS

IDEA4AZOTY

Grupa Azoty S.A.'s business accelerator programme

35 applications, 19 projects in second stage of recruitment

2 applications at evaluation stage, with terms of another 5 under

discussion


1. SatAgro

Agriculture 4.0 - satellite field monitoring

Optimisation of fertilizer application depending on soil conditionsPilot 2017Season 2019: 253 farms, 63 thousand hectares monitored

START-UPS’ PROJECTS: EXAMPLES

2. Sinteco

Diversification of business - organic chemicals

and highly specialised products

Production of high-purity polyglycerols

and glycerine-based polyglycerol esters

Implementation of innovative low-temperature synthesis

CONSOLIDATED FINANCIAL INFORMATION OF

GRUPA AZOTY GROUP

17 GRUPA AZOTY GROUP – CONSOLIDATED FINANCIAL INFORMATION

EFFECT OF PANDEMIC ON CHEMICAL INDUSTRY

Agricultural market

The COVID-19 pandemic had no significant impact on the crop segment of Poland’s agriculture.

Fertilizers - Poland

The COVID-19 pandemic had no significant impact on the Fertilizer segment in Poland.

Fertilizers - other countries

Except temporary logistics constraints of local nature, the COVID-19 pandemic had no significant impact on the fertilizer

segment in the EU.

PolyamideRecord-high price declines in polyamide 6. Increased demand from the food packaging and healthcare sectors.

MelamineOversupply on Asian markets. Demand is still low due to the pandemic.

OXO ALCOHOLS Demand expected to pick up in Q3 2020. Very low crude oil prices expected to keep in check any meaningful increase in product

prices.

Titanium whiteThere has been no reduction in the supply of titanium white in Europe, while the demand is strongly affected by the measures

taken in response to the spread of coronavirus.

Natural gasRecord-high winter temperatures in Europe. Subdued demand due to the COVID-19 epidemic.


IMPACT OF THE PANDEMIC ON THE GRUPA AZOTY GROUP’S BUSINESS

IDENTIFIED RISK AREAS:

Disruptions in feedstock supply chains and in

sale of products due to disruptions in transport

Risk of temporary disruptions in timely

delivery of capital and maintenance projects

Disruptions in continuity of production

processes due to potentially reduced

availability of workforce

Risk of deteriorated liquidity faced by some

trading partners due to payment backlogs

Exchange rate volatility

Possible risks of sales disruption in individual

segments

GDP CHANGES AS FORECAST BY EC

-4.3% -6.1%

-6.2% -7%

-7.2% -7.9%

-8.2% -9.7%

Source: European Economic Forecast Spring 2020

close monitoring of sales, trading partners’ position and

collection of receivables

implementation of crisis management rules, particularly in

maintenance and investment activities

cooperation with public administration to develop

appropriate regulations to mitigate adverse economic

consequences of COVID-19 pandemic

MITIGATING MEASURES:

19

Grupa Azoty S.A.10%

Grupa Azoty Puławy22%

Grupa Azoty Police20%

Grupa Azoty Kędzierzyn16%

COMPO EXPERT15%

Other17%


GRUPA AZOTY GROUP’S FINANCIAL HIGHLIGHTS

19

(PLNm)

-8%

2476 2687 2497

33653104

1000

2000

3000

4000

REVENUE

NET PROFIT

Higher sales volume

Lower fertilizer prices

Lower prices of plastics

EUR and USD exchange rates

307255

188

323

196

0

200

400

1Q2016 1Q2017 1Q2018 1Q2019 1Q2020

-39%

CONTRIBUTION TO THE GROUP’S REVENUE IN Q1 2020

20

Grupa Azoty S.A.14%

Grupa Azoty Puławy42%

Grupa Azoty Police10%

Grupa Azoty Kędzierzyn19%

COMPO EXPERT13%

Other2%


GRUPA AZOTY GROUP’S FINANCIAL HIGHLIGHTS

20

(PLNm)

• * Data for Q1 2017 adjusted for impairment loss on capitalised expenditure at Elektrownia Puławy Sp. z o.o.

517

453403

608

476462

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

EBITDA

EBITDA1(adjusted)*

CONTRIBUTION TO THE GROUP’S EBITDA IN Q1 2020

-22%

Limited impact of pandemic

Higher volumes of fertilizer sales

Low price natural gas

COMPO EXPERT growth


FEEDSTOCK PRICES

EBITDA BRIDGE

KEY FACTORS Q1 2020

positive effect on EBITDA

negative effect on EBITDA

PLNm +230

+19

Decrease in natural gas

prices

Decrease in propylene

prices

Higher commodity prices

-17

-10

-7

Phenol

Benzene

Phosphates

-34 Higher coal and energy

prices

608476

12 356

184 5 23 0

Q1 2019EBITDA

Sales volume* Sellingprices

Feedstockprices

CO2 Other One-offevents**

EBITDA Q12020

* Margin generated on sales volume.

PRICE DEVIATION

-227 Agro Fertilizers

- 45 Plastics

- 84 Chemicals

22

27

12172227

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

EEX

30

50

70

90

110

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

GPL* Gas - PPX*

Zmiana TGE*

1Q19/20

-40%

130

180

230

280

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Electricity (IRDN) − PLN/MWh

30

50

70

90

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020

Hard coal ARA prices (USD/t)

PRICES OF HARD COAL

ELECTRICITY PRICES

CO2 PRICES [Q/Q]

PLN/MWh

Change Q1

19/20

-20%

USD/t

EUR/t

The long-term growth trend initiated in Q3 2017 is in the correction phase.

The number of emission allowances held by the Grupa Azoty Group companies is

sufficient to cover their CO2 emissions for 2019.

The EC continues to work on the European Green Deal which will enforce emission

reductions and reduce the allocation of free emission allowances.

We expect the downward trend to continue.

The Grupa Azoty Group companies have secured the required volumes under their

contracts.

We are awaiting decisions about reliefs under the Capacity Market Act. Regulations on

the amount of charges come into force as of October 1st 2020, already accounted for

in the 2020 budget.

We expect prices to continue at recent levels. In Poland, the supply exceeds the

demand in both the producer and the customer segments of the market.

The Group companies are parties to long-term contracts securing the required volumes.

Deliveries are made as planned.

In mid-year, the EC plans to start its revision of the Community framework for the

taxation of energy products.

NATURAL GAS PRICES 40% year-on-year decline in the average quarterly gas prices according to Gaspool data

High stock levels maintained in case transit through Ukraine is suspended

Significant increase in LNG supply on the global market

Low gas prices in Asia – Europe more favourable to LNG suppliers from the Atlantic

region.

Change Q1

19/20

-31%

Change Q1

19/20

7%

Change

GPL* Q1

19/20

-45%


ENERGY COMMODITIES

PLN/MWH

* Excluding transmission.

23

TOTAL FERTILIZERS

62%

47%

15%

22%

12%

2% 2%

66%22%

2%

5% 5%

SEGMENTS

AGRO FERTILIZERS

REVENUE Q1 2020

EBITDA


COMPO EXPERT

FERTILIZERS

CHEMICALS

PLASTICS

ENERGY OTHER ACTIVITIES

24

Nitrogen fertilizers and ammonia

40%

Nitrogen fertilizers with sulfur

10%

Compoundfertilizers

24%

Specialityfertilizers

21%

Other5%(PLNm) Q1 2019 Q1 2020

Q/Q

change

Segment

revenue

2,097 1,927 -8%

EBITDA412 313 -24%

EBITDA

margin

20% 16% -4pp

SEGMENTS

FERTILIZERS

REVENUE

PANDEMIC-RESILIENT SEGMENT

REVENUE Prices of nitrogen and compound fertilizers fell by

ca. 8-15% year on year, with a ca. 5 increase in

sales volumes year on year.

EBITDA Mainly on the back of low gas prices.

MARGIN Margin driven by a combination of revenue and

cost factors.

PRODUCT GROUPS REVENUE AT COMPANIES

479

265

541

629

223

COMPO EXPERT

Grupa AzotyKędzierzyn

Grupa Azoty POLICEGroup

Grupa Azoty PUŁAWYGroup*

Grupa Azoty S.A.(separate data)

* Excluding melamine and non-fertilizer urea

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment

revenue499 479 -4%

EBITDA45 61 36%

EBITDA

margin9% 13% 4pp

COMPO EXPERT

25 SEGMENTS

AGROMETEOROLOGICAL FACTORS

Agrometeorological factors:

• Driest start of spring since 1979.

• Frost in late March and early April (Finland,

Estonia and Latvia)

WEATHER FACTORS IN EUROPEMarch 1st–April 24th 2020

Source: European Commission, data as at April 27th 2020 and April

30th 2020

0

50

100

150

200

250

300

2017 2018 2019 2020

Forecast total cereal production volume [million tonnes]

EU 27 Poland 5-year average EU 27 5-year average PL

0,0

5,0

10,0

15,0

20,0

25,0

2017 2018 2019 2020

Forecast production of rape seed [million tonnes]

EU 27 Poland 5-year average EU 27 5-year average PL

Excessive

precipitationPrecipitation

deficit

Frost

Drought

26

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment revenue

753 686 -9%

EBITDA102 105 3%

EBITDA margin

14% 15% 1pp

SEGMENTS

CHEMICALS

REVENUE

MAINTAINED MARGINS ON THE DIFFICULT MARKET

REVENUE Lower prices and sales volumes in key business lines

EBITDA Lower prices of almost all chemical products and key feedstock helped

maintain the margin.

MARGIN

Titanium white12%

Melamine15%

Urea (technical …

Plasticizers8%

OXO alcohols21%

Other21%

PRODUCT GROUPS REVENUE AT COMPANIES

479

94

191

Grupa AzotyKędzierzyn

Grupa Azoty POLICEGroup

Grupa Azoty PUŁAWYGroup*

* Melamine and non-fertilizer urea

27

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment revenue

409 373 -9%

EBITDA54 8 -85%

EBITDA margin

13% 2% -11pp

SEGMENTS

PLASTICS

REVENUE

REVENUE Decline in prices of key products by ca. 12%, with sales

volumes maintained

EBITDA Slowdown in demand from key industries, combined with

higher prices of main raw materials, translated into the

segment’s lower margins.MARGIN

Caprolactam6%

Natural polyamide79%

Modified polyamide

9%

Other6%

PRODUCT GROUPS Q1 2020

SEGMENT MOST SUSCEPTIBLE TO CORONAVIRUS EFFECTS

REVENUE AT COMPANIES

95

284

Grupa AzotyPUŁAWY Group

Grupa AzotyS.A.

(separatedata)

28 GRUPA AZOTY

GRUPA AZOTY GROUP FINANCES AS AT MARCH 31ST 2020

AVAILABLE FUNDING LIMITSSECURED CORPORATE FINANCING

• Revolving and umbrella credit facility

• PLN 3,891m

PKO and bank syndicate

• Term Loan Agreement

• PLN 627m

EBRD

• Term Loan Agreement

• PLN 1,115m

EIB

• PLN 5,633m

Total corporate financing*Includes undrawn amount of PLN 507m under a payment services

agreement to finance trade payables.

1 642

717

559

0 600 1 200 1 800

Corporate credit facilities

Overdraft and multi-purpose

facilities

Other financing sources

29

FINANCING OF POLICE POLYMER PROJECT

INVESTOR POTENTIAL AMOUNT

Hyundai (HEC) USD 73m

KIND USD 57m

Grupa LOTOS PLN 500m

GRUPA AZOTY’S INVESTMENT

The Grupa Azoty Group has secured its own funding for the Project

for a total amount of USD 464m, including:

• USD 118m – equity contributed to date

• USD 160m – capital to be contributed

• USD 186m – subordinated loans to be contributed

within the permitted limits of the total “equity” contribution specified in the

Group's corporate financing agreements.

including 47% of equity from Grupa Azoty S.A., 53% of Grupa Azoty Police

Each Sponsor will provide the following “equity”:

• 60% pure equity

• 40% loan

The “equity” financing was raised at the full amount agreed with the banks, i.e. USD 720m. The Group also has a safety buffer to cushion

adverse exchange rate movements until hedges are put in place.

* All amounts translated at the USD/PLN exchange rate of 3.95. Grupa LOTOS's contribution was converted from PLN to USD.

Company's current capital

Grupa Azoty; 345

LOTOS; 127

HEC &

KIND

130

118

Grupa Azoty64,16%

LOTOS17,71%

HEC & KIND18,13%

GRUPA AZOTY

TARGET SHAREHOLDING STRUCTURE *

“EQUITY” FINANCING STRUCTURE*

USD 720M

Thank you for your attention.

31

DISCLAIMER

The information presented below has been prepared by the Grupa Azoty Group (the “Group”) solely for the purpose of its presentation to investors and market analysts on

May 21st 2020 (the “Presentation”). By participating in the meeting at which the Presentation is delivered or by referring to this Presentation, you agree to the following

specific restrictions and disclaimers.

This Presentation does not constitute or form any part of, and should not be considered as, an offer to sell or as an offer to subscribe for, or as a guarantee to purchase or

acquire in other way, any securities of any company of the Group. Neither this Presentation nor any part hereof may form the basis of, or be relied upon in connection with,

any subscription for or acquisition of any securities of the Group. Neither this Presentation nor any part hereof may form the basis of, or be relied upon in connection with,

any investment agreement, commitment or decision relating to securities of the Group companies. This Presentation does not constitute a recommendation regarding any

securities of the Group companies.

No statement or assurance, expressed or implied, has been made by or on behalf of the Group or any of its shareholders, members of its bodies, officers, employees, agents

or advisers or any other person, as to the accuracy, completeness or reliability of information or opinions contained in this Presentation.

This Presentation may contain forward-looking statements. Forward-looking statements are different from statements of historical facts. Statements containing such words as

‘expects’, ‘intends’, ‘plans’, ‘believes’, ‘anticipates’, ‘will’, ‘aims’, ‘can’, ‘would’, ‘could’, ‘continues’ or similar words are examples of such forward-looking statements.

Forward-looking statements include statements about the financial performance, business strategy, plans and objectives of the Group (including development plans relating

to the Group). All forward-looking statements contained in this Presentation relate to matters involving known and unknown risks, issues that are impossible to predict, and

other factors. Actual results and achievements of the Group may be materially different from those described in statements concerning the past,

and from the results and achievements of the Group in the past. Forward-looking statements are made based on various assumptions as to future events, including numerous

assumptions regarding present and future business strategies of the Group and its future business environment. Although the Group believes that its estimates and

assumptions are reasonable, they may prove to be incorrect. The information, opinions and forward-looking statements contained herein are valid only on the date of this

Presentation and are subject to change without notice. The Group and its advisers are not obliged to publish any updates or modify any information, data or statements

contained in this Presentation in the event of a change of strategy or the intentions of the Group, or of facts or circumstances that will have an impact on the strategy or

intentions of the Group, unless such an obligation arises under law. Please note that the only reliable source of information on the financial results, forecasts, events and

ratios of the Group and its individual companies are the current and periodic reports released

by the Group companies in the performance of their disclosure obligations under Polish law.

Neither the Group nor any of its shareholders, members of its bodies, officers, employees, agents or advisers nor any other person shall be liable for any loss arising from the

use of this Presentation

or its contents or otherwise arising in connection with this Presentation.

Neither the Group nor any of its shareholders, members of its bodies, officers, employees, agents or advisers nor any other person shall be required to provide the recipients

of this Presentation with any additional information or to update this Presentation.

This Presentation contains information on the chemical industry in Poland and globally, including information on market shares of the Company and some of its competitors.

The source of such information is always provided in this Presentation, and the Group or any other entity acting on behalf of the Group has not made any independent

verification of the information referred to above.

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Failure to comply with this restriction may constitute a violation of U.S. securities laws. Whoever comes into possession of this Presentation is required to inform themselves

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requirements of the Act.

32

SUBSIDIARIES’ PERFORMANCE

APPENDIX 1

GRUPA AZOTY PUŁAWY GROUP

34 GRUPA AZOTY PUŁAWY GROUP

GRUPA AZOTY PUŁAWY GROUP FINANCIAL HIGHLIGHTS

34

(PLNm)

-11%REVENUE

NET PROFIT

Net profit/(loss) decline:

lower revenue from sales of most products, driven

mainly by a decrease in selling prices (which was higher

than raw material price declines)

higher distribution costs, finance costs and

administrative expenses

161138

86

168

112

1Q2016 1Q2017 1Q2018 1Q2019 1Q2020

-34%

Agro86%

Plastics 10%

Energy2%

Other2%

REVENUE

951 1 003 9101 069

954


GRUPA AZOTY PUŁAWY GROUP FINANCIAL HIGHLIGHTS

35

(PLNm)

QUARTERLY EBITDA

+108 Decrease in natural gas prices

-23 Higher prices of benzene, hard coal and electricity

-115 Decline in revenue, including:

-146 on lower prices

+31 on higher volumes

-31 Other items

PLNm

227204

159

269

207

227 212

159

269

207

23,8% 20,3% 17,4% 25,1% 21,7%

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

EBITDA

EBITDA1(adjusted)*

EBITDA MARGIN

Agro93,6%

Plastics 2,1%

Energy4,0%

Other0,2%

EBITDA

-23%

36

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment

revenue 914 820 -10%

EBITDA 273 228 -16%

EBITDA

margin 30% 28% -2pp


SEGMENTS

DETERIORATED PERFORMANCE DUE TO LOWER SELLING PRICES OF

PRODUCTS DESPITE ATTRACTIVE GAS PRICES

Nitrogen fertilizer

s 60%

Phosphate and compound fertilizers

6%

Melamine12%

Non-fertilizer urea (PULREA, PULNOX,

NOXy)11%

Other11%

PRODUCT GROUPSAGRO

PLASTICS

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment

revenue 113 95 -15%

EBITDA 13 5 -59%

EBITDA

margin 11% 5% -6pp

DETERIORATED PERFORMANCE DUE TO LOWER PRICES AND SALES

VOLUMES OF CAPROLACTAM, WITH HIGHER BENZENE PRICESCaprolactam

99%

Other1%

PRODUCT GROUPS


ONGOING CAPEX PROJECTS

PLN 94.2m

CAPITAL EXPENDITURE IN Q1 2020

Q1 2020 CAPEX STRUCTURE

Construction of coal-fired

power generation unit

1,200 million

Budget spent: 1%

Upgrade of nitric acid unit

695 million

Budget spent: 12%

Facility for production of granulated

fertilizers based on ammonium nitrate

385 million

Budget spent: 96%

Upgrade of steam generator OP-215 No. 2

to reduce NOx emissions

93 million

Budget spent: 41%

Mandatory ; 6%

Maintenance capex; 22%

Growth capex; 55%

Purchase of finished goods; 2%

Other ; 15%


SUMMARY

KEY DEVELOPMENTS IN Q1 2020

changes on the Management Board of Grupa Azoty Zakłady Azotowe Puławy

merger of Koncept Sp. z o.o. and Prozap Sp. z o.o. (registered with National Court Register on January 29th

2020)

new commercial contracts for additional production capacities of ONECON

confirmation of compliance with the requirements for prevention of major industrial accidents

positive reviewer opinion of the application for compensation for energy-intensive sectors and subsectors

agreement on collective disputes with ZZPC trade union

work to expand product portfolio at Zakłady Azotowe Chorzów S.A. – increased sales of fertilizer blends

effects of coronavirus pandemic:

• decline in crude oil and natural gas prices

• lower production and sales of caprolactam (technical problems on the PA6 unit in Guben; smaller

shipments to an Italian customer, logistics constraints, low prices and weak demand as a result of the

pandemic)

• development of a new disinfectant product PULSEPT 5, based on hydrogen peroxide; investment in

PULSEPT 5 production capacities

• engagement with Military Institute of Hygiene and Epidemiology to conduct research on hydrogen

peroxide effects on SARS-Cov-19 viruses

GRUPA AZOTY POLICE GROUP

40 GRUPA AZOTY POLICE GROUP

GRUPA AZOTY POLICE GROUP FINANCIAL HIGHLIGHTS

(PLNm)

Fertilizers83%

Pigments15%

Polymers0,02%

Other2%

Lower average selling prices of most products

Lower cost of natural gas consumption

Increase in prices of other strategic raw materials

REVENUE

-11%

REVENUE

NET PROFIT

6847

3349

23

-20

0

20

40

60

80

100

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

687 699615

727648

0

200

400

600

800

1000


GRUPA AZOTY POLICE GROUP FINANCIAL HIGHLIGHTS

41

(PLNm)

EBITDA for Q1 2020 by segment

29

18

-4

0

Fertilizers

Pigments

Polymers

Other

QUARTERLY EBITDA – deviations from Q1 2019

+55 Decrease in natural gas prices

-13 Higher prices of other strategic raw materials

-77 Revenue decline on lower prices

107

84

68

90

43

15,6% 12,0% 11,1% 12,4% 6,6%

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

EBITDA

EBITDA MARGIN

42

(PLNm) Q1 2019 Q1 2020 Q/Q change

Segment

revenue 613 541 -11.8%

EBITDA 78 29 -63.1%

EBITDA margin13% 5%


SEGMENTS

PRODUCT GROUPS – revenueFERTILIZERS

PIGMENTS

(PLNm) Q1 2019 Q1 2020 Q/Q change

Segment

revenue 101 94 -7.6%

EBITDA 17 18 4.2%

EBITDA margin17% 19%

PRODUCT GROUPS – revenue

Compound fertilizers

65%

Urea and ammonia

29%

Other6%

Titanium white91%

Other9%

Good situation in the nitrogen sector, less favourable price relation of

products to raw materials on the compound fertilizers market

Growth in EBITDA margin


ONGOING CAPEX PROJECTS

KEY PROJECT:

Police Polymers

Production of demineralised water

Construction of PULNOx technical-grade urea solution

production, storage and loading facility

Power station upgrade to connect and supply propane

dehydrogenation and polypropylene units


SUMMARY – KEY DEVELOPMENTS IN Q1 2020

Funds spent on fight against coronavirus

Grupa Azoty Police provided PLN 750,000 to finance fight against

SARS-CoV-2; most of the funds were transferred to the Provincial

Sanitary and Epidemiological Station of Szczecin and used to

purchase high-class coronavirus diagnostic equipment and

consumables necessary to carry out tests

R&D project

The Company is implementing an R&D project: development of a

technology for the production of liquid fertilizers based on

phosphorous bearing materials of sedimentary origin, co-financed

from European Funds (maximum funding amount: PLN 7.4m);

the expected result is product innovations in the form of

advanced liquid fertilizers

Share capital increase

On January 10th 2020, the District Court for Szczecin-Centrum in

Szczecin, 13th Commercial Division of the National Court Register,

registered an increase in the Company's share capital from PLN

750,000,000 to PLN 1,241,757,680 by way of an issue of

49,175,768 Series C ordinary bearer shares with a par value of PLN

10.00 per share

GRUPA AZOTY KĘDZIERZYN

45

46 GRUPA AZOTY KĘDZIERZYN

GRUPA AZOTY KĘDZIERZYN FINANCIAL HIGHLIGHTS

(PLNm)

Fertilizers51%

OXO41%

Other8%

REVENUE

-2.3%

REVENUE

NET PROFIT

Lower prices of natural gas

Lower prices of OXO alcohols, plasticisers, UAN

Higher prices of electricity

Higher sales volumes in the Fertilizers segment

66

48

36

47 49

30Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

+5.4%

441

485 495529 517

400


GRUPA AZOTY KĘDZIERZYN FINANCIAL HIGHLIGHTS

47

(PLNm)

QUARTERLY EBITDA

+36.4 Lower cost of gas consumption

-3.7 Higher cost of hard coal and electricity consumption

-11.9 Decline in revenue, including:

-81.5 on lower prices

+74.6

-4.8

-25.7

+ 10.2

- 5.5

on higher volumes

on sales of merchandise and materials

Change in inventories (due to higher sales volumes)

Lower cost of propylene consumption

Increase in distribution costs

- 2.1 Other items

PLNm

104

81 75

93 91

23,6%

16,6%15,2%

17,6% 17,6%

0,0%

10,0%

20,0%

30,0%

-30

20

70

120

1Q2016 1Q2017 1Q2018 1Q2019 1Q2020

EBITDA

MARŻAEBITDA

-2.5%

EBITDA

Fertilizers74%

OXO10%

Other16%

48

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment

revenue260 265 1.8%

EBITDA 74 67 -9.4%

EBITDA

margin28.6% 25.4% -3.1pp

GRUPA AZOTY KĘDZIERZYN

SEGMENTS

Nitrogen fertilizers

71%RedNOx

10%

Other19%

PRODUCT GROUPSFERTILIZERS

OXO ALCOHOLS SEGMENT

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment

revenue232 213 -8.1%

EBITDA 5 9 71.9%

EBITDA

margin2.3% 4.2% 2.0pp

Alcohols and aldehydes72%

Speciality fertilizers

1%

Oxoviflex27%

PRODUCT GROUPS


SUMMARY

KEY DEVELOPMENTS IN Q1 2020

New website zak.grupaazoty.com

Extension of the compliance certificate for the integrated

management system

Implementation of the first international standard

in occupational safety management

New energy concept [Innovative Heat Management Programme] –

projects in progress:

Upgrade of partial combustion unit at the Ammonia Department

of Grupa Azoty ZAK S.A.

Upgrade of the ammonia liquefaction unit at the Ammonia

Department Cooling Centre

Replacement of steam compressors K-2 and K-3, compressing

gaseous ammonia, with new electric compressors

Research and Development Centre – resolution of the tender

procedure for construction work

Modernisation of car weights

at the main gate – building permit secured, start of upgrade work


On March 13th, an internal order was implemented on measures to reduce the risk of infection with SARS-CoV-2 and

on rules to be followed in the event of infection and spread of infectious diseases at Grupa Azoty ZAK S.A.

On March 16th, the state of epidemic threat was introduced on the company premises as of 10:00 am on that day

until further notice

On March 18th, the company provided PLN 750,000 to the Independent Public Healthcare Complex of Kędzierzyn-

Koźle to combat coronavirus

On March 24th, a special information service for the employees InfoZAK was launched

On March 24th, an agreement on the possibility of changing the work organisation system was reached with the trade

unions active at the company

On March 25th, an additional entry gate for pedestrian, bicycle and passenger cars was opened

On March 31st, the company provided the first batch of sodium hypochlorite to the Independent Public Healthcare

Complex of Kędzierzyn-Koźle; 3 tonnes of the disinfectant for wastewater treatment were secured

On April 10th, the Company lent free-of-charge seven vehicles to hospitals in the region of Opole

On May 6th, a new diagnostic laboratory, financed by Grupa Azoty ZAK S.A., was opened in the infectious disease

hospital in Kędzierzyn-Koźle

The Company granted additional benefits to parents of children aged 8 to 12 who cannot benefit from the Social

Security Institution's allowance

COMPO EXPERT

52

Granular NPK fertilizers

19%

SRF & CRF25%

Fertigation and foliar fertilizers

36%

Liquid fertilizers and biostimulants

20%

COMPO EXPERT

COMPO EXPERT

Consistent implementation of the Group strategy focusing on high-value with a positive

effect on EBITDA

PRODUCT GROUPS

(PLNm) Q1 2019Q1

2020

Q/Q

change

Segment

revenue

499 479 -4%

EBITDA45 61 36%

EBITDA

margin

9% 13% 4pp

53 COMPO EXPERT

KEY DEVELOPMENT FACTORS

Constant focus on strategic initiatives and digitisation – during the

COVID-19 epidemic the worldwide COMPO EXPERT team is

successfully working on a remote basis, engaging in active

customer interaction (product launches via webinars, frequent

exchange of field trial data, remote diagnostics, virtual customer

visits, etc.)

Share of specialty fertilizer sales supporting growth and strategy

implementation at COMPO EXPERT

Despite the adverse impact of COVID-19, COMPO EXPERT achieved

EBITDA growth of 36% (PLN 16m) year on year, driven by a shift

towards high margin products and effective pricing and cost

management

54 COMPO EXPERT

STRATEGIC INITIATIVES

Booster & Forestry project

Optimisation of the fertilizer footprint of a controlled-release

fertilizer in EMEA, South East Asia and South Africa

Target crops: fruit trees, forests, tree nurseries, oil palms

Balu project

Focus on bio-control products as an alternative to traditional

plant protection products in Ecuador, Mexico, and Latin

American countries

Target plants: bananas for export

Tequila project

Focus on on rapidly growing markets in Mexico and

neighbouring countries | NPK water soluble salts

Target crops: berries, avocados, peppers

Those initiatives are expected to strengthen COMPO EXPERT's position as best-in-class

provider of solutions for high-value crops and to help end users increase yields

55

GRUPA AZOTY S.A.

SEPARATE DATA

APPENDIX 2

56

56

(PLNm)

-7%

436 479 476558 521

0

100

200

300

400

500

600

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

REVENUE

NET PROFIT

Lower revenue – price effect

Slowdown in the Plastics segment – deterioration

of polyamide delta

Positive effect of gas prices

22

45 4657

-31

-40

-30

-20

-10

0

10

20

30

40

50

60

70

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

-154%

GRUPA AZOTY S.A. – SEPARATE FINANCIAL INFORMATION

GRUPA AZOTY S.A. FINANCIAL HIGHLIGHTS

Agro Fertiliz

ers43%

Plastics 55%

Energy1%

Other1%

REVENUE Q1 2020

57 GRUPA AZOTY S.A. – SEPARATE FINANCIAL INFORMATION

GRUPA AZOTY S.A. FINANCIAL HIGHLIGHTS

57

(PLNm)

QUARTERLY EBITDA

56

86 86

108

69

12,8% 18,0% 18,1% 19,4% 13,2%

1Q2016 1Q2017 1Q2018 1Q2019 1Q2020

EBITDA

EBITDA(skorygowana)*

MARŻA EBITDA

PLNm

-36%

Agro Fertiliz

ers77%

Plastics 9%

Energy3%

Other11%

EBITDA Q1 2020

Negative contribution from the Plastics segment

(slowdown in the sector)

Lower fertilizer prices

More favourable gas price levels

58

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment

revenue243 223 -8%

EBITDA55 53 -4%

EBITDA

margin23% 24% 1pp

GRUPA AZOTY S.A. – SEPARATE FINANCIAL INFORMATION

SEGMENTS

Nitrogen

fertilizers…

Other11%

PRODUCT GROUPS Q1 2020FERTILIZERS

PLASTICS

(PLNm) Q1 2019 Q1 2020Q/Q

change

Segment

revenue302 284 -6%

EBITDA41 6 -85%

EBITDA

margin14% 2% -12pp

Polyamide

82%

Caprolactam2%

Other16%

PRODUCT GROUPS Q1 2020

59

APPENDIX 3

QUARTERLY RESULTS

60

FINANCIAL DATA

(PLNm)

-120

-20

80

180

280

380

480

-500

0

500

1 000

1 500

2 000

2 500

Revenue Net profit

Q1 2

008

Q2 2

008

Q3 2

008

Q4 2

008

Q1 2

009

Q2 2

009

Q3 2

009

Q4 2

009

Q1 2

010

Q2 2

010

Q3 2

010

Q4 2

010

Q1 2011

Q2 2

011

Q3 2

011

Q4 2

011

Q1 2012

Q2 2

012

Q3 2

012

Q4 2

012

Q1 2

013

Q2 2

013

Q3 2

013

Q4 2

013

Q1 2

014

Q2 2

014

Q3 2

014

Q4 2

014

Q1 2

015

Q2 2

015

Q3 2

015

Q4 2

015

Q1 2

016

Q2 2

016

Q3 2

016

Q4 2

016

Q1 2

017

Q2 2

017

Q3 2

017

Q4 2

017

Q1 2

018

Q2 2

018

Q3 2

018

Q4 2

018

Q1 2

019

Q2 2

019

Q3 2

019

Q4 2

019

Q1 2

020-200

300

800

1300

1800

2300

2800

EBITDA

EBITDA


CONSOLIDATED RESULTS OF THE GRUPA AZOTY GROUP, BY QUARTER

REVENUE AND NET PROFIT

61

Q1 2

008

Q2 2

008

Q3 2

008

Q4 2

008

Q1 2

009

Q2 2

009

Q3 2

009

Q4 2

009

Q1 2

010

Q2 2

010

Q3 2

010

Q4 2

010

Q1 2011

Q2 2

011

Q3 2

011

Q4 2

011

Q1 2012

Q2 2

012

Q3 2

012

Q4 2

012

Q1 2

013

Q2 2

013

Q3 2

013

Q4 2

013

Q1 2

014

Q2 2

014

Q3 2

014

Q4 2

014

Q1 2

015

Q2 2

015

Q3 2

015

Q4 2

015

Q1 2

016

Q2 2

016

Q3 2

016

Q4 2

016

Q1 2

017

Q2 2

017

Q3 2

017

Q4 2

017

Q1 2

018

Q2 2

018

Q3 2

018

Q4 2

018

Q1 2

019

Q2 2

019

Q3 2

019

IV2019

Q1 2

020

-1 000

-750

-500

-250

0

250

500

EBITDA NET DEBT

-50

0

50

100

150

200

250

-250

0

250

500

750

1 000

1 250

Revenue Net profit

FINANCIAL DATA

(PLNm)

EBITDA AND NET DEBT


CONSOLIDATED RESULTS OF THE GRUPA AZOTY PUŁAWY GROUP, BY

QUARTER

REVENUE AND NET PROFIT

62

FINANCIAL DATA

(PLNm)

-350

-250

-150

-50

50

150

0

100

200

300

400

500

600

700

800

900

1 000

Revenue Net profit

-100,0%

-50,0%

0,0%

Q1 2

008

Q2 2

008

Q3 2

008

Q4 2

008

Q1 2

009

Q2 2

009

Q3 2

009

Q4 2

009

Q1 2

010

Q2 2

010

Q3 2

010

Q4 2

010

Q1 2011

Q2 2

011

Q3 2

011

Q4 2

011

Q1 2012

Q2 2

012

Q3 2

012

Q4 2

012

Q1 2

013

Q2 2

013

Q3 2

013

Q4 2

013

Q1 2

014

Q2 2

014

Q3 2

014

Q4 2

014

Q1 2

015

Q2 2

015

Q3 2

015

Q4 2

015

Q1 2

016

Q2 2

016

Q3 2

016

Q4 2

016

Q1 2

017

Q2 2

017

Q3 2

017

Q4 2

017

Q1 2

018

Q2 2

018

Q3 2

018

Q4 2

018

Q1 2

019

Q2 2

019

Q3 2

019

Q4 2

019

Q1 2

020

-300

-100

100

EBITDA EBITDA MARGINEBITDA AND EBITDA MARGIN


CONSOLIDATED RESULTS OF THE GRUPA AZOTY POLICE GROUP, BY

QUARTERREVENUE AND NET PROFIT

The 2013–2015 net profit and EBITDA figures are shown based on a 2016 adjustment related to AFRIG S.A., with an estimated effect on each performance

metric (the effect on the bottom line totals approximately PLN 223m); the results for 2016–2020 are based on reported data

63

PRICES AND VOLUMES

APPENDIX 4

64

41

45

APPENDIX 3

GROUP’S BUSINESS BY GEOGRAPHY

Production

units

Sales representative

officesStabilisation unitsLogistics

1045

44

271

66 48

7

POLAND48%

273 253335

3

280

EU

37%

North America

2%

135

58

South America

1%

Africa

1%

Other Europe

8%

127

16 611

39

Asia

3%

3943

WORLD

EUR

Grupa Azoty

Plastics

Chemicals

Energy

Compo Expert

Agro Fertilizers

REVENUE Q1 2020

PLNm

REVENUE ANALYSIS 2019

Q1 2020

Other

4 4

126

65 APPENDIX 3

AGRO FERTILIZERS

0 200 400 600 800 1 000

Nitrogen fertilizers and ammonia

Nitrogen-sulfur fertilizers

Compound fertilizers

Specialty fertilizers

Q1 2019 Q1 2020

VOLUMES (‘000 TONNES)

0

100

200

300

Nitratefertilizers

Ammoniumnitrate

Urea UAN

Q1 2019 Q1 2020

0

100

200

300

Siarczan amonu Saletrosan RSMS

0

100

200

300

NPK fertilizers NP fertilizers Granular NPKfertilizers

0

100

200

300

SRF & CRF Fertigation andfoliar

fertilizers

Specialtyfertilizers NPK

Liquidfertilizers andbiostimulants

66 APPENDIX 3

AGRO FERTILIZERS

PRICES

source: Ministry of Agriculture and Rural Development

0,00

0,50

1,00

1,50

2,00

2,50

3,00

3,50

4,00

4,50

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020 1 kg

/1 kg NPLN/t

Prices of wheat, maize and rapeseed

Ratio 1 kg of milling wheat /1 kg N

Milling wheat − PLN/t

Fodder corn − PLN/t

50

150

250

350

450

550

650

100

150

200

250

300

350

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 USD/tEUR/t

Prices of nitrogen fertilizers (urea, CAN, AN, AS) and ammonia

Calcium ammonium nitrate (CAN) 27% Germany, CIF inland (bulk) (EUR/t) Ammonium nitrate AN 33.5% France, delivered (bulk) (EUR/t)

Ammonium sulfate Black Sea FOB (white) (USD/t) Ammonia FOB YUZHNY (USD/t)

Prilled urea FOB Baltic–USD/t

źródło: Argus, ICIS, Profercy

50

100

150

200

250

300

350

400

450

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020USD/t

Prices of compound fertilizers (NPK, DAP), potassium chloride and phosphate rock

DAP FOB Baltic USD/t

NPK 3x16 FOB Baltic (USD/t)

source: WFM, Fertecon, CCM

67 APPENDIX 3

CHEMICALS

VOLUMES (‘000 TONNES) PRICES

400

600

800

1000

1200

1400

1600

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020EUR/t

Prices of 2-EH, DOTP and propylene

2-EH FD NWE EUR/t (spot) Propylene FD NWE EUR/t (spot)

DOTP FD * NWE spot – EUR/t

źródło: ICIS

0

50

100

150

OXOalcohols

Plasticizers Urea(technical

grade)

Melamine Titaniumwhite

Q1 2019

Q1 2020

68 APPENDIX 3

PLASTICS

VOLUMES (‘000 TONNES) PRICESPRICES

500

700

900

1100

1300

1500

1700

1900

2100

2300

2500

400

600

800

1000

1200

1400

1600

1800

2000

2200

2400

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Q12020 USD/tEUR/t

Prices of PA6, caprolactam, benzene and phenol

Liquid caprolactam, New Contract, Molten (Monthly) DDP WE (EUR/t)

Polyamide 6 Engineering Resin DDP WE (EUR/t)

Phenol FD NWE (EUR/t)

Benzene CIF NWE (EUR/t)

Crystalline caprolactam CFR N.E.ASIA (USD/t)

source: ICIS, Tecnon

0

10

20

30

40

50

Caprolactam Naturalpolyamide

Modifiedpolyamide

Q1 2019 Q1 2020

Contact

Investor Relations Office

[email protected]

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