“The improvement in Q3 2024 results compared to the previous year is attributed to ongoing corrective measures, including cost optimization, business strengthening, renegotiation of key supplier and partner agreements, and exploration of new business opportunities. In the crucial Agro segment, increased fertilizer imports—primarily from Russia and Belarus—had a significant impact on the segment’s final performance,” noted Andrzej Skolmowski, Vice President of Grupa Azoty. “We are implementing our corrective action plan and presenting the Group’s strategic directions to banks,” Skolmowski added.

Despite the positive impact of lower unit costs, EBITDA margins across key segments remained negative, though they improved significantly year-over-year.

Q3 2024 was another period of weak global and European economic conditions, resulting in insufficient demand for fertilizer and chemical products. European producers continued to feel the negative impact of imports into the EU, which significantly affected Grupa Azoty’s performance across all core business segments.

Prices of most raw materials and energy media declined year-over-year during the quarter, particularly coal and electricity. However, natural gas prices increased by 6% year-over-year (based on TTF quotations), while unit gas costs within Grupa Azoty remained unchanged.

For the nine months ended September 30, 2024, Grupa Azoty reported consolidated sales revenue of PLN 9.828 billion and an EBITDA result of minus PLN 299 million, with an EBITDA margin of minus 3.0%, an improvement of PLN 1.058 billion compared to the same period in 2023.

Agro Segment

In Q3 2024, compared to the same period last year, the main factor influencing the performance of the Agro segment was the import of fertilizers from Russia and Belarus, which led to both a decline in product prices and a reduction in sales volumes.

The persistently unfavorable global economic conditions, and in particular the large volumes of cheaper fertilizers entering the EU mainly from Russia and Belarus, negatively affected the competitive position of European producers, resulting in further price declines. For Grupa Azoty, the average product prices in this segment were 7% lower year-over-year. Market activity in the fertilizer sector, apart from the impact of imports, was also limited due to the overall situation in agriculture. Farmers assessed production profitability negatively, citing uncertainties related to weather phenomena and geopolitical conflicts. Compared to the same quarter of the previous year, Grupa Azoty recorded a 9% decline in fertilizer sales, including a 6% decrease in nitrogen fertilizers and an 18% decrease in multi-component fertilizers, despite an 11% increase in the sales of specialty fertilizers.

The Agro segment’s EBITDA margin in Q3 2024 stood at minus 4.4%, representing an improvement of 3.2 percentage points compared to the same period last year.

Chemicals Segment

In Q3 2024, the Chemicals segment experienced a year-over-year increase in total sales volumes, accompanied by a simultaneous decline in product and raw material prices.

The segment's performance was primarily influenced by unfavorable macroeconomic conditions and a persistent oversupply of products, including from regions with lower production costs compared to Europe. As a result, Grupa Azoty reduced production of certain products, such as technical-grade urea and melamine (with the Melamine III installation at Grupa Azoty Zakłady Azotowe “Puławy” S.A. being halted again in early July). A positive impact on the segment's profitability came from the year-over-year decline in prices for the majority of key raw materials. Significant year-over-year price decreases were noted for Pulnox and NOXy, while sulfur prices rose sharply. Logistical disruptions in the Red Sea region led to limitations in imports of Asian products and an increase in their costs. However, this was insufficient to significantly improve the position of European producers.

The Chemicals segment’s EBITDA margin in Q3 2024 was minus 6.7%, representing an improvement of 21.9 percentage points compared to the same period last year.

Plastics Segment

In Q3 2024, the Plastics segment recorded a year-over-year increase in production and sales volumes, alongside a decline in raw material prices (phenol) and an increase in the price of the main product, natural polyamide.

The market conditions for the entire product chain remained heavily influenced by supply and demand dynamics in end-use markets, which were shaped by challenging macroeconomic conditions. Imports of products such as fibers and films from regions with higher cost competitiveness continued to impact the European market, despite logistical constraints caused by the conflict in the Middle East. The ongoing difficult supply-demand situation resulted in caprolactam production at Grupa Azoty Puławy remaining on hold in Q3 2024, except for the temporary operation of the installation to process existing inventories of raw materials and intermediates.

The Plastics segment’s EBITDA margin in Q3 2024 was minus 16.1%, an improvement of 17.9 percentage points compared to the same period last year. The segment’s results also include production and sales from Grupa Azoty Polyolefins S.A., which is currently in the commissioning and start-up phase. In Q3 2024, the company sold 56,000 tons of polypropylene, of which 99% was homopolymer.