Letter from the President of the Management Board
Ladies and Gentlemen,
I invite you to read our integrated report for 2021, which was a challenging period for all Grupa Azoty Group companies.
The key events in 2021 at Grupa Azoty S.A. included the announcement of a new Strategy for 2021–2030, which is a highly ambitious, but also a down-to-earth action plan of the Group for the next ten years. We have re-defined our mission and vision, giving priority to climate neutrality and energy transition and our role in building Poland’s and Europe’s food security. The key objectives for the coming years are to prepare our companies for challenges presented by the European Green Deal and Circular Economy, decarbonise production and reduce the Group’s environmental emissions. Grupa Azoty S.A. began to implement green initiatives covering production and energy generation as well as decarbonisation projects with a total budget of nearly PLN 2.7 billion. The ‘Green Azoty’ project, included in the Strategy, is a comprehensive and coherent plan for the largest green investments ever undertaken in the Polish chemical industry.
We are expanding our range of sustainable products and solutions. Innovative fertilizers and plastics placed on the market in 2021 are helping our customers comply with legal requirements and achieve their own environmental objectives. We seek to maximise our positive impact on climate and natural environment and emphasise our vital role in fostering Poland’s and Europe’s food security.
We are not only changing our products, but also our production methods. For many years now, we have consistently implemented solutions to reduce the carbon intensity of our plants in order to save energy and decarbonise the value chain. In line with our Strategy, in 2030 the share of renewable energy in the mix used by the Grupa Azoty Group will reach at least 40%, and by 2050 we want to become carbon neutral.
Environmental matters are an important, but obviously not the only area addressed by our Strategy until 2030. The document presents our plans for managing business segments, finance, raw materials, innovation as well as further pursuit for operational excellence. We consistently strengthen cooperative links between the Group companies to make it possible for them to jointly build competitive advantages. Harmonious cooperation within the Group brings a variety of benefits to all our companies and the entire Polish economy. This is why it is a direction worth pursuing in the coming years as well. I encourage you to read this report for details.
It is almost impossible to discuss 2021 developments in the chemical industry without mentioning massive fluctuations on commodity exchanges and unprecedented hikes in the prices of raw materials, mainly gas, but also propylene, phenol, benzene and phosphate rock. An increase was also seen in the costs of electricity and CO2 emission allowances. Despite the considerable feedstock pressure, in 2021 the Grupa Azoty Group companies decided not to halt or cut fertilizer production unlike many of their competitors in Europe. We effectively secured supplies of fertilizers for the domestic market, which is crucial for Grupa Azoty S.A. We did not reduce our fertilizer capacities knowing that fertilizer production is fundamental to Poland’s and Europe’s food security. Despite high prices of raw materials, we delivered robust financial performance. In 2021, Grupa Azoty S.A. posted consolidated revenue of PLN 15.90 billion (up PLN 5.38 billion year on year), EBITDA of PLN 1.95 billion (up PLN 624 million year on year), and EBITDA margin of 12.2%. 2021 net profit came in at PLN 634 million, up PLN 279 million year on year.
Grupa Azoty S.A.’s growth would not be possible without investment projects. Our largest investment project, i.e., Polimery Police, is implemented on schedule, with all major equipment delivered to the construction site and installed. The launch of polypropylene production, planned for 2023, will strengthen the Grupa Azoty Group’s and Poland’s position on the European market of plastic producers, and will help further diversify the Group’s business.
We know that innovation is necessary for our companies to maintain their long-term competitive edge. In line with our innovation strategy, we will allocate up to 2–3% of the Group’s total revenue to research and development until 2030. These funds and our state-of-the-art research facilities will allow us to develop new or improve existing products in order to best cater to the needs of the ever-evolving world and meet customer expectations.
In 2021, we continued to fight the pandemic. Initiatives we took to support hospitals in purchases of necessary equipment and to apply technologies available across our organisation to produce disinfectants confirmed that we take corporate social responsibility seriously and translate it into real action to protect the health and safety of Poles, including our employees, trading partners and customers.
Although this report covers the year 2021, it must mention Russia’s war against Ukraine, started in 2022. In the first few days of Russia’s military invasion, we focused on helping Ukrainian refugees fleeing their homeland. As part of the financial support, we made donations to Caritas and the Polish Red Cross, among other organisations. The assistance also included provision of lodging and transport, transfer of equipment for Ukrainian fire-fighters, and organising blood donor drives and collections of aid supplies.
We are also analysing the business consequences of Russia’s invasion of Ukraine on a daily basis. We are taking steps to mitigate risks associated with the shortage of energy commodities on the market or constrained availability of staff at our trading partners following the general mobilisation order in Ukraine.
We present to you the Grupa Azoty Group integrated report for 2021. I am positive that the information contained in this report will assure you that we have chosen the right path, and that sustainable development and socially responsible business are of strategic importance to the entire Grupa Azoty Group.
Best regards,
