The Management Board of Grupa Azoty S.A. (the “Company”) publishes, attached hereto, estimated selected consolidated financial results of the Grupa Azoty Group (the “Group”) for the third quarter and the first nine months of 2023.

Discussion of the results for the third quarter of 2023

For the three months ended September 30th 2023, the Grupa Azoty Group reported consolidated revenue of PLN 3,075m, EBITDA of PLN -348m, and an EBITDA margin of -11.3%.

The period saw improved demand, notably in the Agro Segment and, to a degree, in the Chemicals Segment, especially relative to the prior quarter. This led to an increase in production volumes and a decrease in fertilizer inventories. However, most Grupa Azoty products were offered at prices that were significantly lower than those from the previous year, i.e. by an average of 52%. At the same time, the costs of energy utilities, such as electricity and coal, rose year on year. While considerably higher than in other markets, natural gas prices in Europe remained stable for most of the period. This stabilisation, which contrasted the volatility witnessed in the previous year, was primarily attributable to a record surge in renewable energy production, abundant gas stocks in European storage facilities, and above-average temperatures. The decline in product prices in the third quarter of 2023 was not accompanied by an offsetting drop in feedstock prices, resulting in shrinking margins.

Main drivers of the results for the third quarter of 2023 in the key segments:

Agro

The third quarter is traditionally a period of intense fieldwork in Poland, leading to a seasonal drop in demand for fertilizer products. However, the three months to September 30th 2023 saw a rise in demand for Grupa Azoty products, mainly attributable to farmers restocking their supplies and purchasing fertilizers for the upcoming autumn application season. The total sales volume of fertilizers was up 8% year on year, resulting in a 6% output increase. The segment’s performance was primarily driven by improved demand for nitrogen and compound fertilizers and the market reverting to its usual seasonal demand-price dynamics.

The tariff suspension in the first half of 2023 (from December 2022) was a major factor supporting the expansion in Europe of imports from regions with significant energy, environmental and labour cost advantages. The prices of natural gas, which is vital for fertilizer production, were at their lowest for the year during the third quarter, increasing only towards the period’s end. It is noteworthy that gas prices in Europe remain even several times higher than in other markets, as indicated by benchmarks such as Henry Hub in the US.

In the third quarter of 2023, the Agro Segment’s EBITDA margin stood at -7.6%.

Chemicals

For the Chemicals Segment, the three months to September 30th 2023 were marked by subdued demand due to adverse global macroeconomic conditions, high inventories, and an influx of cheaper imports to Europe. Consequently, the segment recorded an 18% year-on-year decline but a 14% quarter-on-quarter increase in sales volume. Notably, sales of technical-grade sulfur and urea rose by almost 50% relative to the previous quarter. In the three months to September 30th 2023, product prices fell significantly year on year across the Group’s geographies, with the largest decreases (over 60%) observed for NOXy, melamine, and technical grade urea. Prices for the segment’s key feedstocks, including gas, propylene and ilmenite, also declined year on year, reflecting the prevailing market trends.

The segment’s EBITDA margin for the third quarter of 2023 was negative at -28.6%.

Plastics

In the three months to September 30th 2023, the Plastics Segment posted a 20% year-on-year decline in polyamide 6 sales volume, largely attributable to reduced demand from all major consumers, including engineering plastics, carpet fibres, and packaging film producers. This drop in demand placed strong downward pressure on the prices of European plastics, which, to a certain extent, helped curtail imports from highly cost-competitive markets, especially in Asia. Benzene prices were 33% lower than a year earlier.

The segment’s EBITDA margin for the third quarter of 2023 was negative at -34.0%.

Estimated results for the first nine months of 2023

In the nine months ended September 30th 2023, the Grupa Azoty Group generated consolidated revenue of PLN 10,462m, EBITDA of PLN -1,357m, and an EBITDA margin of -13.0%.

The amounts presented above are estimates and may be subject to change. The final results will be presented in the consolidated report for the third quarter and the nine months ended September 30th 2023, to be issued on November 8th 2023.

The Management Board of Grupa Azoty S.A. (the “Company”) publishes the estimated selected consolidated financial results of the Grupa Azoty Group (the “Group”) for the second quarter and the first half of 2023.

Discussion of the results for the second quarter of 2023

In the three months ended June 30th 2023, the Grupa Azoty Group generated consolidated revenue of PLN 3,491m, EBITDA of PLN -608m, and an EBITDA margin of -17.4%.

The second quarter was a period unfavourable macroeconomic conditions leading to low demand in the markets for the Group’s products and in the downstream markets. Low demand led to additional downward pressures on product prices and a decline in sales volumes and, in consequence, to curtailed production in all key business segments of the Group. The reported quarter was also a period of relatively high costs of raw materials and energy carriers, adversely impacting the margins.

Natural gas prices, while fluctuating, remained in a downward trend. The pressure on prices was supported by elevated inventory levels, increased power output from renewable energy sources, continued strong LNG supplies to Europe, as well as favourable weather conditions and a drop in coal prices.

The results for the second quarter of 2023 were bolstered by the sale of CO₂ emission allowances (EUAs) purchased on the market in previous periods by the subsidiaries: Grupa Azoty Zakłady Azotowe Puławy S.A., Grupa Azoty Zakłady Chemiczne Police S.A. and Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. The sale involved excess EUAs resulting from lower production levels at the Subsidiary and remaining after it had surrendered EUAs matching its actual emissions for 2022. The total positive effect of these transactions on the Group’s results in the period under analysis amounted to PLN 289m.

Main drivers of the results for the second quarter of 2023 in the key segments:

Agro

In the three months to June 30th 2023, there was a 24% year-on-year decrease in total fertilizer sales by volume due to a relatively low demand, with compound fertilizers experiencing an even steeper sales decline of 49%. Unfavourable conditions prevailed in Polish agriculture, with grain prices following a downward trend in the domestic market. The European Union’s suspension of tariffs on urea and ammonia remained in effect until June 17th 2023. There was an increase in imports of fertilizers into the European and domestic markets. Prices of natural gas, a key feedstock for fertilizer production, were in a downtrend. During the second quarter, TTF spot prices were EUR 35/MWh, marking a 63% year-on-year decrease. This, coupled with factors in the agricultural market and the supply-demand dynamics within the fertilizer market, led to diminished demand and exerted downward pressure on fertilizer prices.

Due to weak demand, the Grupa Azoty Group aligned production levels at its own facilities with the prevailing supply and demand conditions in the European market during the quarter under review. Total fertilizer production in the three months to June 30th 2023 was 43% lower year on year. Production of compound fertilizers fell 49% year on year, and the quarterly results were adversely affected by a year-on-year rise in costs of energy carriers.

The Agro Segment posted an EBITDA margin of -28.8% for the second quarter of 2023.

Chemicals

In the Chemicals Segment, the second quarter of 2023 saw reduced purchasing activity in the segment’s key economic sectors, namely construction and furniture manufacturing.

During the period, all product prices experienced year-on-year declines, with the largest decreases recorded for sulfur, melamine, and technical grade urea. Also the sales volumes of the segment’s products declined across the board, except for sulfur. Prices of key raw materials for OXO alcohols and plasticizers production (propylene and terephthalic acid) dropped year on year, whereas the unit cost of ilmenite, which is used in the production of titanium white, saw an increase.

The segment posted an EBITDA margin of -43.3% for the three months ended June 30th 2023.

Plastics

The Plastics Segment saw a decline in polyamide 6 sales volumes in the second quarter of 2023, which were down by one-third year on year as a result of reduced internal demand in Europe and limited export opportunities. Prices of polyamide 6 produced by the Grupa Azoty Group were under continuous downward pressure. Prices of raw materials (benzene and phenol) were lower year on year.

European producers faced competitive imports of cheaper products in the PA6 chain, particularly from Asia. Increased production in the automotive sector and rising new car sales in the EU did not translate into higher orders, let alone an overall surge in demand for polyamide 6.

The segment posted an EBITDA margin of -47.7% for the second quarter of 2023.

Estimated results for the first half of 2023

In the six months ended June 30th 2023, the Grupa Azoty Group generated consolidated revenue of PLN 7,386m, EBITDA of PLN -1,009m, and an EBITDA margin of -13.7%.

The amounts presented above are estimates and may be subject to change. The final figures will be presented in the consolidated report for the six months ended June 30th 2023, scheduled for issue on September 27th 2023.

The Management Board of Grupa Azoty S.A. (the “Company”) publishes the estimated selected consolidated financial results of the Grupa Azoty Group (the “Group”) for the first quarter of 2023.

Discussion of Q1 2023 estimated results

In the first quarter of 2023, the Group generated estimated consolidated revenue of PLN 3,895m, EBITDA of PLN -401m, and EBITDA margin of -10.3%.

The quarter saw continuing demand-supply imbalances in European markets caused, among others, by the consequences of Russia’s military aggression against Ukraine, persistently high inflation, high prices of energy carriers, including electricity and coal, and duty-free non-EU imports of fertilizers and plastics produced with cheaper raw materials. These developments led to a drop in demand for the Company’s products.

During the period under analysis, a decline was observed in the activities of the economic sectors buying the Group’s products, such as the automotive, construction and furniture industries. The supply-demand imbalance resulted in pressures to reduce product prices and in output cuts, which the Company has been announcing in monthly current reports since the beginning of this year. The Company expects the market to improve from the third quarter of 2023.

The first quarter results were bolstered by PLN 234m in funding granted to the Group companies by the National Fund for Environmental Protection and Water Management as part of the support provided to energy-intensive sectors in view of the sudden increases in natural gas and electricity prices in 2022.

Although the Group is taking measures to boost its operating profitability, it does not rule out the possibility of exceeding the permitted level of the net debt/EBITDA ratio at the end of the first half of 2023. Should this scenario become likely, the Company will take appropriate pre-emptive steps to mitigate the risks.

The key operational factors that impacted the results posted by the main segments were as follows:

Agro

Fertilizer sales fell in the first quarter due to low purchasing activity of customers. In addition, the supply-demand situation was adversely affected by EU and non-EU imports (mainly of urea), which were driven, among others, by the decision of the Council of the European Union of December 16th 2022 to temporarily suspend urea and ammonia tariffs. In the case of compound fertilizers, a year-on-year increase in the prices of key raw materials (phosphate rock, potassium chloride) caused the prices of these fertilizers to grow. Coupled with a slump in demand, this led to a lower output and sales of compound fertilizers compared to the same period last year.

In the Agro Segment, a year-on-year decline in the prices of natural gas, being the key feedstock for the manufacture of nitrogen fertilizers, did not offset the drop in product prices and sales volumes.

The Group adjusted its fertilizer production to demand and supply conditions on an ongoing basis and, like most European fertilizer producers, significantly reduced their output.

The Agro Segment’s estimated EBITDA margin for the first quarter of 2023 stood at -5.9%.

Chemicals

Due to low buyer activity, the Chemicals Segment reported a significant decline in sales volumes, mainly of melamine and OXO alcohols. Higher sales volumes were observed in the case of sulfur, which was mainly exported. In addition, demand in the Chemicals Segment was adversely impacted by high inventory levels at customers. Prices of most products were lower than in the same period last year. Price increases were reported for titanium white, urea solution (PULNOx) and ammonia water (LIKAM).

The Segment’s result was boosted by a drop in the price of the main raw material, propylene. In the case of the other raw materials, their prices were close to or higher than those reported in the first quarter of 2022.

Due to the supply and demand situation, the production of melamine at Grupa Azoty PUŁAWY was temporarily suspended in March.

The Chemicals Segment’s estimated EBITDA margin for the first quarter of 2023 stood at -7.2%.

Plastics

In Europe, demand for the segment’s products from all of the key sectors (automotive, construction, and packaging) remained low. Moreover, manufacturers were under strong pressures from non-EU imports. As a result of the adverse market conditions, the Plastics Segment reported a year-on-year decline in both sales volumes and prices of natural polyamide, its key product.

Prices of the main raw materials for caprolactam and polyamide production (benzene, phenol) fell year on year, but high inventory levels throughout the supply chain of the aforementioned sectors caused a postponement of purchasing decisions.

Due to the supply and demand situation, the production of caprolactam at Grupa Azoty PUŁAWY was temporarily suspended in March.

The Plastics Segment’s estimated EBITDA margin for the first quarter of 2023 stood at -28.0%.

The amounts presented above are preliminary and may be subject to change. The final figures will be presented in the consolidated report for the first quarter of 2023, scheduled to be published on May 22nd 2023.

The Management Board of Grupa Azoty S.A. (the “Company”) publishes the estimates of selected consolidated financial results of the Grupa Azoty Group (the “Group”) for the fourth quarter of 2022 and for 2022.

Commentary on fourth-quarter 2022 results

In the fourth quarter of 2022, the Grupa Azoty Group generated consolidated revenue of PLN 5,107m and negative EBITDA of PLN -296m, with a negative EBITDA margin of -5.8%.

The Group’s results for the fourth quarter of 2022 were adversely affected by significant impairment losses on non-financial non-current assets and write-downs of inventories of finished goods, semi-finished products and raw materials. Information on the impairment losses and write-downs recognised on these assets was announced by the Company on March 13th 2023 in Current Report No. 11/2023.

The inventory write-downs recognised in the fourth quarter of 2022 led to a drop in consolidated EBIT and EBITDA by approximately PLN 404m.

The recognition of the impairment losses on non-financial non-current assets resulted in a decrease of PLN 963m in the Grupa Azoty Group’s consolidated EBIT for 2022. In accordance with the Group’s accounting policies, the impairment losses and write-downs are one-off non-cash charges and have no effect on the Group’s consolidated EBITDA.

Main factors with a bearing on the Group’s financial performance in the key segments in the fourth quarter of 2022 compared with the fourth quarter of 2021:

Agro

The Agro Segment’s performance in the fourth quarter of 2022 was mainly determined by strong volatility of commodity prices, including natural gas, demand-supply imbalances and falling prices of agricultural crops.

Natural gas prices in the period under review changed rapidly, and the TTF spot price ranged from EUR 22 to EUR 160 per MWh. In view of a downward trend in gas prices, in October 2022 the three key companies of the Grupa Azoty Group decided to resume production of nitrogen fertilizers that had been suspended or curtailed in August 2022.

The fertilizer market was stagnant in the fourth quarter of 2022. Producers looked forward to market activity and an increase in sales in view of the upcoming fertilizer season, while customers were holding off on purchases in anticipation of a drop in fertilizer prices as gas prices fell quarter on quarter. The consequence of these divergent expectations was low demand and growing fertilizer stocks at manufacturers and distributors. Another reason for the reduction of purchases by customers was the worrisome signals from the agricultural market, especially the observed downward trend in prices of agricultural crops, which was driven by high grain imports from Ukraine.

The Agro Segment’s EBITDA margin generated in the fourth quarter of 2022 was significantly lower year on year and fell to -5.3%. The Segment’s results were reduced by the impairment losses and write-downs.

Chemicals

In the Chemicals Segment, low demand and imports of competitively priced products from Asian markets were observed in the fourth quarter of 2022. At the same time, prices grew year on year for all products except sulfur and fell quarter on quarter (with the exception of melamine). Product sales volumes declined considerably year on year, with increases recorded only for sulfur.

The market showed little demand for OXO alcohols, plasticizers, titanium white, melamine and NOXy as products from the segment’s portfolio came in high quantities to the European market from Asia. The market also kept a close eye on the possible impact of an increase in China’s export capacity due to production recovery following the lifting of the preventive measures introduced under the zero COVID policy. Melamine production at Grupa Azoty Zakłady Azotowe Puławy S.A., limited since July 2022, was partially resumed at the end of October 2022.

The Chemicals segment’s EBITDA margin delivered in the fourth quarter of 2022 was negative at -3.9%. The Segment’s results were reduced by the impairment losses and write-downs.

Plastics

In the Plastics Segment, prices of raw materials (benzene, phenol) and products declined quarter on quarter and rose year on year. Market prices of polyamide went on a downward trend as a result of weak demand, an influx of imports and falling prices of raw materials and energy. Demand shrank across all industries: automotive, construction, packaging, electronics and electrical engineering.

Following change in market conditions, including a quarter-on-quarter decrease in the prices of basic raw materials (benzene and phenol), a decision was made in October 2022 to resume production of caprolactam and polyamide 6 at the production facilities of the Company and Grupa Azoty Zakłady Azotowe Puławy S.A., which had been halted in August 2022 due to high costs of raw materials.

The Segment’s EBITDA margin delivered in the fourth quarter of 2022 was negative at -43.4%. The Segment’s results were reduced by the impairment losses and write-downs.

Key performance drivers in 2022

In 2022, the Grupa Azoty Group generated consolidated revenue of PLN 24,658m and EBITDA of PLN 2,545m, with an EBITDA margin of 10.3%.

The Group’s performance in the reporting period was determined largely by the market consequences of Russia’s armed aggression against Ukraine and the record increase in prices of raw materials used in production and energy carriers. As a consequence of the macroeconomic climate, each business segment recorded a significant rise in product prices and a simultaneous decrease in sales volumes, and experienced demand-supply imbalances. Growing inflation and the resulting increase in fixed costs also weighed on performance.

The demand-supply imbalance observed during 2022, combined with the strong volatility in raw material prices, made it necessary to temporarily stop or cut production at the three key companies of the Grupa Azoty Group, i.e., Grupa Azoty S.A. (fertilizers and plastics), Grupa Azoty Zakłady Azotowe Puławy S.A. (fertilizers, caprolactam and melamine) and Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. (fertilizers).

The Company’s financial statements for 2022 are being audited, therefore the presented figures are estimates and may be subject to change. The final figures will be presented in the consolidated report for 2022, scheduled for issue on March 30th 2023.

The Management Board of Grupa Azoty S.A. published, attached hereto, estimated selected consolidated financial results of the Grupa Azoty Group (the “Group”) for the third quarter and the first nine months of 2022.

Discussion of the results for the first nine months of 2022:

In the first nine months of 2022, the Grupa Azoty Group generated consolidated revenue of PLN 19,551m, EBITDA of PLN 2,842m, and an EBITDA margin of 14.5%.

In the reporting period, the Group’s performance was affected by the consequences of Russia’s armed aggression against Ukraine and the unprecedented spike in prices of commodities, in particular natural gas, being the main raw material used in fertilizer production.

Discussion of the results for the third quarter of 2022:

In the third quarter of 2022, the Group generated consolidated revenue of PLN 6,314m, EBITDA of PLN 267m and EBITDA margin of 4.2%. Year on year, the Group recorded a drop in results.

The above figures were delivered amid high uncertainty caused by soaring and volatile prices of commodities, in particular natural gas, which resulted in temporary production cuts at certain units of the Company and its subsidiaries: Grupa Azoty Zakłady Azotowe Puławy S.A. and Grupa Azoty Zakłady Azotowe Kędzierzyn S.A.

Main factors with a bearing on the Group’s financial performance in the key segments in the third quarter of 2022 compared with the third quarter of 2021:

1. In the Agro segment:

The reporting quarter saw further increases in the prices of raw materials used in fertilizer production, in particular natural gas, being a consequence of Russia’s armed aggression against Ukraine.

The rapid growth in natural gas prices which began in the second half of 2021 continued, reaching a peak at the end of August 2022. The average market price of natural gas in the third quarter of 2022 compared to the same period last year rose by more than 300%.

As a consequence of the unprecedented increases in the price of natural gas, a decision was made in August 2022 to temporarily reduce production at three key companies of the Group: the Company, Grupa Azoty Zakłady Azotowe Puławy S.A. and Grupa Azoty Zakłady Azotowe Kędzierzyn S.A. The Group companies were among the last producers in the European Union who decided to cut production.

The Agro Segment’s EBITDA margin generated in the third quarter of 2022 stood at 1.6%.

2. In the Chemicals segment:

In the third quarter of 2022, the product demand situation and growing prices of raw materials used in production were the main determinants of the Chemicals Segment’s performance. Demand on the target markets was relatively weak and European producers came under significant competitive pressure from non-EU imports.

As a result of the adverse market situation, melamine production at Grupa Azoty Zakłady Azotowe Puławy S.A. was temporarily suspended.

The products for which a year-on-year growth in sales volumes was reported were sulfur and NOXy.

The EBITDA margin achieved by the segment in the third quarter of 2022 stood at 0.8%.

3. In the Plastics segment:

In the third quarter of 2022, the Plastics Segment reported significant volatility in prices of key raw materials: benzene and phenol. The prices climbed to record highs in July 2022 to start a steep decline in August. The high cost of raw materials prompted the decision to temporarily halt production.

The Plastics segment was mainly affected by poor demand from the main markets of polyamide applications. The demand situation was additionally aggravated by the summer holiday season. The exception was the packaging sector where demand remained stable throughout the reporting period. There were no signs of any significant demand recovery in the EU automotive industry, an important customer for the Plastics segment. Moreover, the reporting period saw higher imports of more attractively priced polyamide products and derivatives into the European market.

The segment’s EBITDA margin generated in the third quarter of 2022 was negative at -2.7%.

The amounts presented above are estimates and may be subject to change. The final results will be presented in the consolidated report for the third quarter and the nine months ended September 30th 2022, to be issued on November 9th 2022.

The Management Board of Grupa Azoty S.A. published the estimated selected consolidated financial results of the Grupa Azoty Group (the “Group”) for the second quarter and the first half of 2022.

Discussion of the results for the first half of 2022

In the first half of 2022, the Grupa Azoty Group generated consolidated revenue of PLN 13,237m, EBITDA of PLN 2,575m, and an EBITDA margin of 19.5%.

Discussion of the results for the second quarter of 2022

In the second quarter of 2022, the Group generated consolidated revenue of PLN 6,410m, EBITDA of PLN 1,240m, and an EBITDA margin of 19.3%.

The results were positively impacted by the level of product prices in Europe in the markets where the Group operates.

The Group’s results were adversely impacted by record high prices of raw materials used in production processes and lower sales volumes for most fertilizer groups, chemical products and plastics.

The results generated by the Group during the period under review were strongly influenced by the turbulence caused by Russia’s aggression against Ukraine, which has a negative effect on the availability and prices of raw materials, eventually translating into rising prices of final products.

Main drivers of the results for the second quarter of 2022 in the key segments:

Agro

In the Agro Segment, the reported quarter was another consecutive period of high prices of feedstock and raw materials used in fertilizer production, particularly natural gas, potassium chloride and phosphate rock.

The challenging conditions in the raw materials market are a consequence of Russia’s aggression against Ukraine, which has led to Russia reducing or completely halting gas supplies to the EU countries. The chains of supply to the Group of some important raw materials and intermediates have also been changed or disrupted.

As a consequence of production cutbacks introduced by key European fertilizer producers due to record high prices of commodities, particularly natural gas, the supply of fertilizers across Europe has significantly declined.

In the first half of 2022, the Group’s production units operated at full available capacity and the Group satisfied the demand for fertilizers on the Polish market during the spring fertilizer season.

Prices for natural gas, the key feedstock used in fertilizer production, were on a strong upward trend at the end of the second quarter of 2022, with record highs reached in the third quarter of 2022. The average market price of natural gas in the second quarter of 2022 compared to the same period last year rose by approximately 290%. These changes, combined with the market situation, led to a major spike in product prices.

The sales volume in the Agro Segment in the second quarter of 2022 was down 11% year on year, and even as much as 21% in the case of compound fertilizers.

The Agro Segment’s EBITDA margin generated in the second quarter of 2022 stood at 18.0%.

Chemicals

In the Chemicals Segment, the second quarter of 2022 saw a year-on-year increase in prices of all products, with a concurrent decrease in most products’ sales volumes. The rapid increase in the prices of raw materials for the production of chemicals significantly pushed up product prices, leading to a slump in demand.

The market situation for melamine was affected by the approaching end of the effective period of anti-dumping duties on imports of melamine from China into the EU.

In the case of sulfur, the price increase was a consequence of Russia’s military aggression against Ukraine and supply constraints due to the elimination of distribution channels from Russia and Kazakhstan.

The increase in sales volumes was recorded mainly for technical urea and OXO alcohols.

The segment’s EBITDA margin generated in the second quarter of 2022 stood at 22.0%.

Plastics

In the Plastics Segment, the second quarter of 2022 saw a year-on-year increase in the prices of the main raw materials used in production processes, that is benzene and phenol , by 18% and 24%, respectively , with a concurrent increase in the prices of polyamide manufactured at the Group. Polyamide sales volumes were slightly down year on year amid slumping demand in the automotive industry caused by difficulties securing semiconductors and other components the supply of which was not rebuilt after the COVID-19 pandemic.

This resulted in temporary production cuts and shutdowns at end users. The packaging sector continued to show a strong and stable demand.

The segment’s EBITDA margin generated in the second quarter of 2022 was 8.6%.

The amounts presented above are estimates and may be subject to change. The final figures will be presented in the consolidated report for the first half of 2022, scheduled to be published on September 28th 2022.

At the same time, the Company would like to note that the results of future periods may be adversely affected by the consequences of partial production cuts at Grupa Azoty S.A., Grupa Azoty Zakłady Azotowe Puławy S.A. and Grupa Azoty Zakłady Azotowe Kędzierzyn S.A., introduced in the third quarter of 2022 due to an extraordinary and unprecedented increase in natural gas prices.

The Management Board of Grupa Azoty S.A. published the estimated selected consolidated financial results of the Grupa Azoty Group for the first quarter of 2022.

Comments on the results for the first quarter of 2022

In the first quarter of 2022, the Grupa Azoty Group generated consolidated revenue of PLN 6,827m, EBITDA of PLN 1,335m and EBITDA margin of 19.6%.

All business segments delivered positive EBITDA figures in the first quarter od 2022.

The Agro Segment made the largest contribution to the Group’s EBITDA for the quarter. The Group’sperformance mainly benefited from significantly higher prices of chemicals, fertilizers and plastics. The factors with a negative effect on the Group’s results in the period included lower sales volumes and higher prices of raw materials. The first quarter of 2022 is another period marked by continued imbalance between supply and demand in the markets caused by the post-pandemic economic recovery, additionally exacerbated by Russia’s war on Ukraine.

Main performance drivers in the key segments:

Agro

The Agro Segment recorded higher prices of all raw materials and feedstocks used in production (including a nearly five-fold increase of the price of natural gas), leading to higher prices of fertilizer products. The prices of both raw materials and products were affected by the economic situation in Europe in the wake of Russia’s invasion of Ukraine, which had an adverse effect on the balance of supply and demand, especially as regards raw materials, materially reducing the availability of products on the market in the peak of the fertilizer application season. The Group’s sales volumes fell, largely as a consequence of lower output of compound fertilizers due to the failure of power steam generators at the Company’s subsidiary Grupa Azoty Zakłady Chemiczne Police S.A. (“Grupa Azoty Police”). On a consolidated basis, these negative financial consequences were mitigated by measures taken to enable the use, while the failure lasted, of some of Grupa Azoty Police’s commodities contracted at prices lower than spot prices paid by the other Group companies. The Agro Segment’s significant share in the Group’s consolidated results is attributable to the seasonality of mineral fertilizers’ application and growing demand for fertilizers applied in spring, observed in the first quarter of each year. The Agro segment was also affected by restrictions on imports of fertilizers manufactured in Russia, as a result of the sanctions introduced following the launch of Russia’s assault on Ukraine, as well as by reduced fertilizer ouput by European competitors.

In the first quarter of 2022, in view of production shutdowns at European producers and the soaring price of the main feedstock (natural gas), the key to the strong performance of the Agro segment was the strategy to maximise the Group’s nitrogen fertilizer output while maintaining product prices at one of the lowest levels in the European Union.

In the first quarter of 2022, the Agro Segment delivered an EBITDA margin of 19.3%, compared with 12.4% in the corresponding period of the previous year.

Chemicals

The Chemicals Segment recorded a rise in prices of products and raw materials used in their production. The growth rate of the segment’s product prices was the largest in the case of NOXy, melamine, technical-grade urea and sulfur. The rapid increase of sulfur prices is a consequence of higher crude oil prices and logistical problems associated with Russian ports and constraints in deliveries made via Black Sea ports. In the case of melamine, high prices are driven by rising prices of natural gas, just like in the case of NOXy prices. The prices of technical-grade urea were also in an upward trend and Russia’sinvasion of Ukraine raised concerns of supply disruptions. Sales volumes in almost each of the segment’s product groups were lower.

In the first quarter of 2022, the Chemicals Segment reported a strong year-on-year increase in EBITDA. The EBITDA margin rose from 9.9% in the first quarter of 2021 to 21.0% in the first quarter of 2022.

Plastics

The Plastics Segment saw higher prices of raw materials (benzene, phenol) and products. The sales volumes of the segment’s key product – natural polyamide – grew year on year. Demand from target application markets was good, except for the automotive sector’s continuing problems with the availability of microprocessors, resulting in production stoppages at automotive plants in Europe. The situation was aggravated by Russia’s invasion of Ukraine, leading to production stoppage by automotive companies in Russia and a marked decline in the availability of components from eastern directions.

The segment’s EBITDA margin for the period reached 10.9%, which means an over twofold improvement compared with the corresponding period of the previous year, when it stood at 4.1%.

The amounts presented above are estimates and may be subject to change. The final figures will be presented in the consolidated report for the first quarter of 2022, scheduled to be published on May 25th 2022.

The Management Board of Grupa Azoty S.A. published, attached hereto, estimated selected consolidated financial results of the Grupa Azoty Group for the fourth quarter of 2021 and the whole of 2021

Comments on the results for the fourth quarter of 2021

In the fourth quarter of 2021, the Grupa Azoty Group generated consolidated revenue of PLN 5,484m and EBITDA of PLN 887m, with EBITDA margin at 16.2%.

All key business segments delivered positive EBITDA in the period and reported year-on-year improvement, reflecting strong demand for plastics and chemical products.

The largest contributor to the Grupa Azoty Group’s consolidated EBITDA for the fourth quarter of 2021 was the Chemicals segment, which reported the best performance in its history. Its contribution to the consolidated EBITDA for the fourth quarter of 2021 grew to 43.3%, from 19.7% in the fourth quarter of 2020. The Plastics segment also increased its contribution to the consolidated EBITDA, from 1.3% to 7.9%, while the share of Agro Fertilizers fell to 40.0%, compared with 52.5% in the same period of the previous year.

The fourth quarter of 2021 saw an uptrend in the selling prices of fertilizers, fuelled by a rapid and very strong price growth for the key raw materials used in fertilizer production, especially natural gas, but also phosphate rock and potassium salt, which brought about an unprecedented surge in production costs.

The Company’s subsidiary, Grupa Azoty Zakłady Azotowe Puławy S.A., recognised an impairment loss on non-current assets in the Plastics segment, and on April 1st 2022 the Company announced its effect on the consolidated financial statements for 2021, i.e. a decrease of PLN 288m in the Group's consolidated operating profit.  In accordance with the Grupa Azoty Group’s accounting policy, the recognition of impairment, which is a non-cash item, had no impact on the Company's consolidated EBITDA.

Main performance drivers in the key segments:

Agro Fertilizers
The performance of the Fertilizer-Agro Segment was driven by high prices of raw materials, in particular natural gas (the key feedstock in the production of fertilizers), which rose by over 400% year on year. Increased selling prices in all fertilizers groups had a positive effect on the segment’s results, despite a decline in sales volumes, in particular in the case of compound fertilizers.

The increased fertilizer prices resulted from higher production costs and reflected the pricing trends seen among other European producers. Thanks to the measures taken by Grupa Azoty to secure supplies to satisfy fertilizer demand on the domestic market, fertilizer prices in Poland in the fourth quarter of 2021 were among the lowest in the European Union.

In the fourth quarter, the Grupa Azoty Group did not stop or limit fertilizer production at its plants.

With a significant growth of raw material costs, EBITDA margin in the Agro Fertilizers segment was 11.8%, compared with 10.5% the year before.

Chemicals
High price growth dynamics were seen in all product groups in the Chemicals segment, with the strongest rise reported for melamine, technical-grade urea and NOXy. The segment's performance benefited from improved sales volumes and increased product price levels, which more than offset a negative impact of higher raw material prices.

As a result, the Chemicals segment reported a strong year-on-year improvement in EBITDA in the fourth quarter of 2021 , resulting in a more than twofold growth of EBITDA margin, from 9.1% in the fourth quarter of 2020 to 21.1% in the fourth quarter of 2021.

Plastics
A key development with the largest positive effect on the Plastics segment's performance in the fourth quarter of 2021 was higher caprolactam and polyamide prices. The period saw a decline in demand from the key consumer of plastics, i.e. the automotive sector, but it was offset by continuing strong demand from other sectors. Two negative drivers of the segment's results in the period were lower sales volumes and high raw material prices, mainly for benzene and phenol.

However, the Plastics segment felt the economic recovery in the fourth quarter 2021:  its EBITDA margin for the period reached 14.5%, which means an over tenfold improvement compared with the corresponding period of the previous year, when it stood at 1.3%.

Key performance drivers in 2021:

The key development driving the Grupa Azoty Group’s performance in 2021 was growing prices of raw materials and products. A steady economic recovery was seen during the year as the impact of the COVID-19 pandemic was lessening. At the same time, demand-supply imbalances were apparent as a result of supply chain disruptions in the raw material and product markets.

In 2021, Grupa Azoty generated consolidated revenue of PLN 15,901m (2020: PLN 10,525m) and EBITDA of PLN 1,953m (2020: PLN 1,323m), with EBITDA margin at 12.3%(2020: 12.6%).

The Group’s performance improved as a result of business diversification, with nearly half of the EBITDA figure coming from the Chemicals and Plastics segments. In the key Agro Fertilizers segment, the gas price surge to historic highs brought down EBITDA and EBITDA margin by 6.0% and 4.1 pp, respectively.

The Management Board of Grupa Azoty S.A. published, attached hereto, estimated selected consolidated financial results of the Grupa Azoty Group for the third quarter and the first nine months of 2021.

Despite a significant increase in gas prices in the third quarter of 2021, the Grupa Azoty Group’s consolidated EBITDA grew on the back of business diversification.

Factors with an adverse effect on the results in the nine months to September 30th and in the third quarter of 2021 included mainly higher prices of raw materials (chiefly gas, but also propylene, phenol, benzene and phosphate rock), and higher costs of electricity and CO2 emission allowances.

The Group’s consolidated EBITDA in the aforementioned periods was boosted by high prices of most products in the key segments (Fertilizers, Chemicals and Plastics) as well as higher total sales volumes in the Chemicals and Plastics segments. At the same time, the Group’s consolidated EBITDA was positively impacted by a higher-than-expected allocation of free carbon allowances, which was recognised in the estimated accounting for emission costs for the first half of 2021.

Main factors with a bearing on the Group’s financial performance in the third quarter of 2021 compared with the third quarter of 2020:

1. In the Agro Fertilizers segment:

The segment’s performance was hurt by soaring gas prices. The segment’s results were also driven by a year-on-year increase in prices and sales volumes of nitrogen, compound and speciality fertilizers. As a result, the segment’s EBITDA contracted year on year. Prices of fertilizers grew as a consequence of higher production costs. Production cuts at leading manufacturers also played a part. Despite historically high prices of gas, the Company and its subsidiaries did not halt or significantly reduce their fertilizer production, taking steps to secure demand for fertilizers primarily on the domestic market, which is treated as a priority.

2. In the Chemicals segment:

The year-on-year improvement in the Chemicals segment’s performance was attributable to sharp rises in prices of all products, particularly of melamine, OXO alcohols, plasticizers and sulfur, driven by growing demand. Margins were adversely affected by higher prices of raw materials and slightly lower sales volumes.

3. In the Plastics segment:

The segment’s performance was mainly driven by a year-on-year increase in margins along the entire product chain (benzene/phenol – caprolactam – polyamide 6), resulting from higher demand from target application markets despite the continuing problems experienced by the automotive industry due to shortage of electronic components. In addition, in the third quarter of 2021 the Company discontinued its polyoxymethylene business (POM) business and sold some of the related assets, which benefited the segment’s performance.

The amounts presented above are estimates and may be subject to change. The final results will be presented in the consolidated report for the third quarter and the nine months ended September 30th 2021, to be issued on November 9th 2021.

The Management Board of Grupa Azoty S.A. decided to publish the estimated selected consolidated financial data of the Grupa Azoty Group for the second quarter and the first half of 2021:

Q2 2021:
Consolidated revenue: PLN 3,173m
EBIT: PLN 169m
EBITDA: PLN 361m
Net profit: PLN 168m

Results by segment:
Revenue of the Agro Fertilizers segment: PLN 1,642m
EBIT: PLN 71m
EBITDA of the Agro Fertilizers segment: PLN 154m

Revenue of the Chemicals segment: PLN 896m
EBIT: PLN 76m
EBITDA of the Chemicals segment: PLN 101m

Revenue of the Plastics segment: PLN 456m
EBIT: PLN 6m
EBITDA of the Plastics segment: PLN 26m

Revenue of the Energy segment: PLN 83m
EBIT: PLN 0m
EBITDA of the Energy segment: PLN 28m

Revenue of the Other Activities segment: PLN 96m
EBIT: PLN 16m
EBITDA of the Other Activities segment: PLN 52m

H1 2021:
Consolidated revenue: PLN 6,535m
EBIT: PLN 383m
EBITDA: PLN 766m
Net profit: PLN 254m

Results by segment:
Revenue of the Agro Fertilizers segment: PLN 3,661m
EBIT: PLN 250m
EBITDA of the Agro Fertilizers segment: PLN 415m

Revenue of the Chemicals segment: PLN 1,712m
EBIT: PLN 131m
EBITDA of the Chemicals segment: PLN 181m

Revenue of the Plastics segment: PLN 842m
EBIT: PLN -5m
EBITDA of the Plastics segment: PLN 33m

Revenue of the Energy segment: PLN 168m
EBIT: PLN -1m
EBITDA of the Energy segment: PLN 56m

Revenue of the Other Activities segment: PLN 152m
EBIT: PLN 8m
EBITDA of the Other Activities segment: PLN 81m

Compared with the first half od 2020, the Grupa Azoty Group’s EBITDA for the first half of 2021 were boosted mainly by higher prices of almost all products in the key segments (Fertilizers, Chemicals and Plastics) and higher sales volumes in the Chemicals and Plastics segments. Factors with an adverse effect on the results included lower sales in the Fertilizers Segment, as well as an increase in variable costs, caused mainly by higher prices of gas, phenol, propylene and benzene, higher prices of carbon allowances (relative to unhedged positions), as well as a lower amount of compensation paid to energy-intensive companies. At the same time, the Group’s EBITDA was positively impacted by an increase in the expected allocation of free carbon allowances, which was recognised in the estimated accounting for emission costs for the first half of 2021.

Main factors with a bearing on the Group’s financial performance in the second quarter of 2021 compared with the second quarter of 2020:

1. In the Agro Fertilizers segment:

The segment’s performance benefited from higher prices of nitrogen, compound and speciality fertilizers, as a result of – on the one hand – pressure coming from higher prices of urea, which sets the price paths for other fertilizer products, mainly AN, and – the other hand – the conditions prevailing across global market, i.e. oversupply, low stocks and high prices of agricultural produce (wheat, maize, rape). The segment’s performance was adversly affected mainly by a major spike in natural gas prices.

2. In the Chemicals segment:

In the Chemicals Segment, the year-on-year performance improvement was attributable to a solid growth in sales volumes (particularly plasticisers, melamine, NOXy and technical-grade urea) and prices of all key products of the segment. The margins were negatively impacted by strong increases in the prices of raw materials: propylene, terephthalic acid, phosphate rock.

3. In the Plastics segment:

The segment’s performance was buoyed by a year-on-year increase in the prices of polyamide due to higher demand on the main application markets. The segment was negatively impacted by higher prices of key raw materials for production, i.e. benzene and phenol, which came as a result of the products’ limited availability on the market (including as a consequences of plant failure at major manufacturers) and adverse supply and demand movements in Europe.

The final results will be presented in the consolidated report for the first half of 2021, to be published on September 9th 2021.

Management Board of Grupa Azoty S.A. decided to provide the estimated selected consolidated financial results of Grupa Azoty for the first quarter of 2021:

Revenue: PLN 3,362.0m
EBITDA: PLN 405.1m
Net profit: PLN 85.9m

Results by segment:

Revenue of the Agro Fertilizers segment: PLN 2,018.8m

EBITDA: PLN 261.5m

Revenue of the Chemicals segment: PLN 815.3m

EBITDA: PLN 80.0m

Revenue of the Plastics segment: PLN 386.6m

EBITDA: PLN 7.8m

Revenue of the Energy segment: PLN 84.6m

EBITDA: PLN 27.6m

Revenue of the Other Activities segment: PLN 56.7m

EBITDA: PLN 20.6m

Positive drivers of the Grupa Azoty Group’s EBITDA included mainly the higher prices of products across all key segments (Fertilizers, Plastics and Chemicals). On the other hand, EBITDA was negatively affected mainly by the higher prices of raw materials used in the Group’s production processes, primarily natural gas, as well as an increase in electricity transmission charges (the new “capacity charge” and revised RES charge) and in the prices of CO₂ emission allowances.

EBITDA performance of the Agro Fertilizers segment was largely a result of the higher selling prices of nitrogen, compound and speciality fertilizers compared with Q1 2020, driven by strong demand resulting from high grain prices and lower fertilizer imports. The positive effect of the increase in selling prices was offset by an increase in production costs due to the higher prices of raw materials, mainly natural gas.

The development of the Plastics segment’s EBITDA relative to Q1 2020 was largely a combined effect of the higher average product prices and increased demand across virtually all applications. The prices of key raw materials had a varied effect on EBITDA. In the period under review, some of the prices went up (benzene) and some went down (phenol) on a year-on-year basis.

EBITDA of the Chemicals segment was driven by a surge in the prices of OXO alcohols, melamine, technical grade urea and plasticizers. Demand on most segment markets rebounded versus Q1 2020, with the rebound particularly pronounced in the case of OXO alcohols. The increase in product prices more than offset the increases in the prices of most raw materials used in the Chemicals segment’s production processes.

A significant factor behind net profit posted by the Group for Q1 2021 was also the effect of measurement of financial instruments hedging cash flows of the Polimery Police project, entered into in accordance with the requirements of the credit facilities agreement and resulting from the financing raised in USD and payments made in EUR, mainly to the general contractor. The measurement of these financial instruments had the effect of increasing the Group’s finance costs in Q1 2021 by approximately PLN 90.1m.

The Company’s Management Board considers the information on the estimated consolidated results to be material given that the results generated in Q1 2021 differ from market expectations. At the same time, the estimated consolidated financial results generated in Q1 2021 are lower than the average consolidated results reported by the Company in the corresponding periods of the three previous years, i.e. Q1 2018–2020.

The Management Board of Grupa Azoty S.A. (the “Company”) published the estimated selected consolidated financial data of the Grupa Azoty Group for Q4 2020:

Revenue: 2,735.9m
EBITDA: 318.6m
Net profit: 92.3m

and the estimated selected consolidated financial data of the Grupa Azoty Group for 2020:

Revenue: 10,524.5m
EBITDA: 1,321.5m
Net profit: 355.4m

The Company’s Management Board considered the information on the consolidated results to be material in light of the recorded improvement in financial performance in the fourth quarter of 2020 relative to the corresponding periods of the three prior years. Furthermore, the results for the fourth quarter of 2020 differ from market expectations.

The Company's Management Board also reported that these results included compensation payable to eligible companies of the Grupa Azoty Group for 2019 and 2020 under the Act on the Compensation Scheme for Energy-Intensive Sectors and Subsectors, estimated at some PLN 218.8m as well as funding received under the Act on Special Arrangements to Prevent, Counteract and Combat COVID-19, Other Infectious Diseases and Crisis Situations Caused by Them of March 2nd 2020, version 4.0. The amount of the funding granted to Grupa Azoty Group companies was PLN 64.9m

The Management Board of the Company decided to publish estimated selected consolidated financial results of the Azoty Group for the second quarter of 2020 on July 31, 2020.

Estimated selected consolidated financial results of the Grupa Azoty Group for Q2 2020
Revenue: PLN 2,268.9m
EBITDA: PLN 353.4m
Net profit: PLN 105.6m

Estimated selected separate financial results of the Company for Q2 2020
Revenue: PLN 303.8m
EBITDA: PLN 25.1m
Net profit: PLN 160.3m

The Management Board of the Company decided to publish estimated selected consolidated financial results of the Azoty Group for the third quarter of 2019 on October 29, 2019.

Revenue: PLN 2,563.9m
EBITDA: PLN 316.3m
Net profit: PLN 61.0m

and selected estimated results for the nine months ended September 30th 2019:

Revenue: PLN 8,666.4m
EBITDA: PLN 1,257.3m
Net profit: PLN 455.9m

The published estimates did not differ from the actual consolidated financial results of the Azoty Group for the third quarter of 2019 by more than 10%. The report containing complete consolidated financial data for the third quarter of 2019 was published on November 13, 2019.

The Management Board of the Company decided to publish estimated selected consolidated financial results of the Azoty Group for the first quarter of 2019 on April 25, 2019.

Revenue: PLN 3,365m
EBITDA: PLN 607m
Net profit/(loss): PLN 323m

The published estimates did not differ from the actual consolidated financial results of the Azoty Group for the first quarter of 2019 by more than 10%. The report containing complete consolidated financial data for the first quarter of 2019 was published on May 23, 2019.

The Management Board of the Company decided to publish estimated selected consolidated financial results of the Azoty Group for the third quarter of 2018 on October 31, 2018.

Revenue: PLN 2,324.7m
EBITDA: PLN 44.1m
Net profit/(loss): PLN -116.8m

The published estimates did not differ from the actual consolidated financial results of the Azoty Group for the third quarter of 2018 by more than 10%. The report containing complete consolidated financial data for the third quarter of 2018 was published on November 8, 2018.

The Company’s Management Board decided to announce, on August 11th 2018, selected key estimates of the Grupa Azoty Group’s consolidated performance figures for the first half year 2018.

Revenue: PLN 4,877.0m
EBITDA: PLN 528.9m
EBITDA net of one-off items: PLN 535.7m
Net profit/(loss): PLN 132.1m
Profit net of one-off items: PLN 175.2m

The announced estimates did not deviate from the Grupa Azoty Group’s actual consolidated performance figures for the first half year 2018 by more than 10%. The report including the complete consolidated financial information for the first half year 2018 was released on 28th of August 2018.

The Company’s Management Board decided to announce, on April 4th 2018, selected estimates of the Grupa Azoty Group’s consolidated performance figures for 2017.

Revenue: PLN 9,617m
EBITDA: PLN 1,187m
EBITDA net of one-off items: PLN 1,262m
Net profit/(loss): PLN 489m

The announced estimates did not deviate from the Grupa Azoty Group’s actual consolidated performance figures for 2017 by more than 10%. The annual report including the complete consolidated financial information for 2017 was released on 19th of April 2018.

The Company’s Management Board decided to announce, on March 16th 2017, selected estimates of the Grupa Azoty Group’s consolidated performance figures for 2016.

Revenue: 8,955.69m
EBITDA: PLN 1,005.78m
Operating profit: PLN 486.06m
Net profit: PLN 375.15m

Segment results:

Agro Fertilizers:
Revenue: PLN 5,115.65m
EBITDA: PLN 599.81m

Chemicals:
Revenue: PLN 2,295.33m
EBITDA: PLN 270.78m

Plastics:
Revenue: PLN 1,117.84m
EBITDA: PLN -32.53m

Energy:
Revenue: PLN 239.75m
EBITDA: PLN 95.54m

Other:
Revenue: PLN 187.12m
EBITDA: PLN 72.20m

The announced estimates did not deviate from the Grupa Azoty Group’s actual consolidated performance figures for 2016 by more than 10%. The annual report including the complete consolidated financial information for 2016 was released on 28th of April 2017.

The Company’s Management Board decided to announce, on February 27th 2014, selected estimates of the Grupa Azoty Group’s consolidated performance figures for 2013, in connection with the release of 2013/1014 half-year consolidated report by Grupa Azoty Zakłady Azotowe Puławy S.A., a subsidiary.

Revenue: PLN 9,821m
Operating profit: PLN 702m
Net profit: PLN 713m

The announced estimates did not deviate from the Grupa Azoty Group’s actual consolidated performance figures for 2013 by more than 10%. The annual report including the complete consolidated financial information for 2013 was released on March 16th 2014.