Financial performance

In 2021, our revenue was up 51.1% year on year, and gross profit rose by PLN 904,932 thousand, or 41.6%, relative to 2020. Total operating profit was PLN 876,505 thousand, up 57.7% year on year.

Source: Company data
¹ EBIT is calculated as operating profit/(loss) as disclosed in the statement of profit or loss, adjusted for gain on a bargain purchase.
² EBITDA is calculated as operating profit/(loss) before depreciation and amortisation, adjusted for gain on a bargain purchase.

Revenue by segment

Source: Company data.

Revenue by segment

Fertilizers

In 2021, the Fertilizers segment posted revenue of PLN 8,767 million relative to PLN 6,364m the year before. The strong revenue growth was accompanied by a large increase in costs, translating into a lower EBITDA margin, of 8.8% (2020: 12.9%). The segment was under strong pressure from all-time high prices of gas, which pushed up fertilizer prices. This global trend was further exacerbated by the demand-supply imbalance resulting from major supply constraints in the EU market due to temporary production stoppages or scale-downs by European producers. It should be stressed that in 2021 the Grupa Azoty Group neither suspended nor cut down its fertilizer production. In volume terms, fertilizer sales in 2021 shrank by 4.7%, mainly in the case of urea – owing to a ban on using urea without an inhibitor or biodegradable coatings for agricultural purposes, introduced in August – and NPK fertilizers. In line with global market trends, in 2021 fertilizer prices grew on average by 43.9% relative to the previous year, driven by rising production costs. It should be noted that prices of natural gas in that period rose 298.0% year on year.

Plastics

The segment’s aggregate revenue in 2021 was PLN 1,829 million, an increase of 61.1% year on year (from PLN 1,135 million). Following the cost and price optimisation, the segment’s results markedly improved on the back of higher sales, with EBITDA margin rising from -2.8% in 2020 to +9.7% in 2021. In 2021, the plastics market continued on an upward trend, fuelled by large growth in demand, mainly in the automotive (persistent problems with the availability of semiconductors stifled demand in the fourth quarter), BCF carpet fibers and films sectors. The favourable market conditions helped achieve higher transaction prices and margins. The prices of key production feedstocks (benzene, phenol) rose significantly year on year, by 94.6% and 63.1%, respectively, which – coupled with higher prices of gas and energy – put a lot of upward pressure on product prices.

Chemicals

Year on year, the Chemicals segment reported a record-high increase in revenue, of 83.6%, to PLN 4,630 million, with strong growth of EBITDA margin, which improved by 4.5pp, to 15.0%. Revenue growth was reported on sales of all products, with melamine (up 138.3% y/y) and technical grade urea (up 101.6%) topping the list. The main price growth driver in Chemicals was strong demand accompanied by supply disruptions experienced by other producers. The volume of products sold also increased. Similarly to the other segments, the prices of raw materials rose markedly, but without reducing the segment’s margin.

Structure of assets

In 2021, the Grupa Azoty Group’s assets rose to PLN 23,644,705 thousand, by PLN 5,437,555 thousand relative to the end of 2020.

Structure of equity and liabilities

Consolidated statement of cash flows

In 2021, the Group generated positive net cash from operating activities of PLN 5,784,827 thousand, up by PLN 3,079,666 thousand on 2020.

Stock Exchange

Grupa Azoty S.A.

The price of Grupa Azoty shares was highly volatile throughout 2021, having increased by over 23% year on year, to PLN 33.8 at year’s end.

Grupa Azoty Puławy

The price of Grupa Azoty Puławy shares declined gradually over 2021. Year on year, the price of the shares decreased by over 8%, to PLN 78.8 at 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.

2021 was an extremely challenging period for the chemical industry. Key factors affecting the Grupa Azoty Group’s business in 2021 included a sharp rise in the prices of gas, energy commodities and CO2 emission allowances, as well as new regulatory requirements.

Market environment of individual segments

Agro Fertilizers

The prices of cereals in 2021 increased year on year. The prices of rye, rape, maize and wheat rose by, respectively, 43%, 39%, 30% and 28%. The main reasons for this increase were the weather conditions and poor supply of grains in the agricultural sector. Due to the emergence of a new global factor, namely the outbreak of the war in Ukraine, the prices of cereals are expected to remain high in the coming periods. Concerns about limited availability of products from countries affected by the war are driving up prices on the fertilizer markets. In an attempt to make savings, the agricultural sector may choose to reduce fertilizer dosage, which may lead to a decrease in fertilizer consumption.

Plastics

In 2021, prices were high along the entire plastics product chain. Production costs rose sharply as a consequence of soaring prices of energy, further aggravated by supply disruptions due to the unavailability of materials. In addition, geopolitical unrest is likely to keep the prices at high levels. Manufacturers will take a more short-term focus, seeking to retain as much flexibility as possible in their purchasing decisions.

Chemicals

The prices of chemicals in 2021 also increased year on year due to growing prices of raw materials, poor availability of products and continuing demand.

Energy

Another driver of the Group’s operating expenses were record-high prices of natural gas. In the first quarter of 2021, the price of natural gas in Europe was at a previously seen level of EUR 20/MWh. However, subsequent periods saw a steady and slow increase in the natural gas prices, to EUR 85/MWh at the end of the third quarter, due to low temperatures and low wind levels, as well as the growing prices of CO2 emission allowances and coal, making the use of gas more economically attractive. The fourth quarter of 2021 witnessed record-high daily prices of natural gas, which amounted to almost EUR 185/MWh before Christmas, driven by revised weather forecasts predicting lower temperatures and a drop in the average wind power output. Natural gas prices in the coming periods will depend on the weather and the war in Ukraine. However, taking into account the current conditions, we expect the average price of gas in Europe to be higher than in the previous year.

Prices of natural gas

In 2021, coal prices rose 2.5-fold, driven by stronger demand from Asia, Europe and the post-pandemic economic recovery. The prices of coal in the coming periods will be affected, on the one hand, by the EU’s policy geared towards reducing its consumption and, on the other, by continuing demand for electricity.

Prices of hard coal

The average annual price of electricity rose by over 90% year on year, on account of higher demand due to the economic recovery and higher prices of energy commodities. The prices of electricity are expected to stay high in the following periods.

Prices of electricity

Cost of raw materials

In 2021, the Grupa Azoty Group was fully solvent, with a sound credit standing of all the Group companies. The liquidity management policy operated by the Group consisted in maintaining surplus cash and available credit facilities as well as limits under the intragroup financing agreement, and in ensuring that their level was safe and adequate to the scale of the Group’s business. The pandemic situation is monitored on an ongoing basis.

All liabilities under the Grupa Azoty Group’s borrowings were repaid when due, and there was no threat to its ability to continue servicing its debt. The Group has access to umbrella limits under PLN-, EUR- and USD- overdraft facilities covered by physical cash pooling arrangements and under a multi-purpose credit facility, which may be used as directed by Grupa Azoty S.A. in accordance with changes in funding requirements of any of the subsidiaries. The Group also has access to bilateral overdraft limits and multi-purpose facilities available to the Group companies. As at the reporting date, the amounts available to be drawn by the Group totalled PLN 7,135 million. The Group’s financial standing is sound, and there are no material threats or risks of its deterioration in the future. The Group may use credit facilities if there is a need to increase its debt finance.

To optimise its interest income and expenses and to effectively manage the global liquidity limit, in 2021 the Group held short-term funds in current accounts in PLN, EUR and USD with PKO BP S.A., linked under a physical cash pooling structure with the individual companies’ sublimits in those currencies. As at December 31st 2021, the Group held a total of PLN 2,362 million in bank accounts and as short-term deposits.
Net debt as at December 31st 2021 was PLN 1,923 million, having decreased by PLN 713 million year on year. Net debt to EBITDA was 0.96, down from 2.1 in 2020.

The major drivers determining Grupa Azoty S.A.’s development in 2022, including growth of the Group’s financial resources and assets, will include prices of the key feedstocks (including natural gas) and ability to generate positive margins on the main products sold both in Poland and abroad. Future financial results will also be influenced by USD and EUR exchange rates and the economic situation in agriculture and in the industries which are final customers.

Net Debt Bridge

Currency structure of GRUPA AZOTY Group’s borrowings

as at Dec 31 2021

In 2021, total capital expenditure amounted to PLN 2,561.4 million, having fallen by 8% compared with the year before.

The Grupa Azoty Group is currently implementing several projects, of which Polimery Police is the largest one in terms of budget. The total investment is PLN 7,211 million, of which PLN 3,106 million has already been expended, including PLN 829 million in 2021. The project is 83% complete and is scheduled to be finished in 2023. The Polimery Police project is to build an on-purpose propylene dehydrogenation plant (PDH) and a polypropylene production plant with associated infrastructure, including the expansion of the Police Sea Port to include a propane and ethylene handling and storage terminal.

Read more about our projects