CIECH Group’s Q3 2017 results: higher revenues and EBITDA in the organic segment

In the third quarter of 2017, CIECH Group’s consolidated revenues amounted to PLN 836.3 million (compared to PLN 853.9 million in the third quarter of 2016), and normalised (n) EBITDA amounted to PLN 178.4 million (compared to PLN 212.8 million a year earlier). Good results were generated in the organic segment (AGRO business, resins and foams), recording a year-on-year increase both in terms of revenues and EBITDA (n). For the AGRO business, the period from September 2016 to September 2017 was particularly positive. With a shrinking plant protection chemicals market in Poland, CIECH Sarzyna managed to record a 20% sales increase compared to the previous season. 

  • CIECH Group’s consolidated revenues for the third quarter of 2017 was PLN 836.3 million (compared to PLN 853.9 million a year earlier).
  • Normalised (n) EBITDA was PLN 178.4 million (compared to PLN 212.8 million a year earlier), with net profit at PLN 85.2 million (compared to PLN 155.6 million a year earlier).
  • Investments implemented: new products in the salt arena (CIECH Soda Polska), boosting of sodium bicarbonate production capacities (CIECH Soda Deutschland), R&D (mainly for CIECH Sarzyna, involving plant protection chemicals and resins) and improved logistics infrastructure (CIECH Soda Polska).
  • International expansion: CIECH Group’s products are now available in approx. 100 global markets across Europe, Asia, Africa and, recently, Australia. Foreign sales (i.e. outside of countries where CIECH has its factories) accounts for approx. 50% of the Group’s revenues. 

"In the third quarter, we were very active in driving growth and efficiency, and prepared ourselves for the soda contracting season next year and the sale of plant protection chemicals in the fourth quarter. Our AGRO business has recorded good results in the season that ended in September. By reorienting ourselves towards specialised and high-margin products in the resins area, and developing products in the foams area, we have managed to mitigate the negative effect of high raw material prices and to consolidate CIECH Group’s market position. We have also been dynamically developing our salt business by expanding what we offer and our customer base. All these efforts will allow us to achieve our long-term goals as part of our strategy," said Maciej Tybura, President of the Management Board of CIECH S.A. 

Thanks to its investments in previous years, CIECH Group has managed to ship higher volumes of soda ash to the market than in the previous year. The weaker performance of the soda segment is mainly due to the higher prices of the raw materials for soda production (coke, anthracite and coal), which were higher than in the third quarter of last year, and due to lower sales prices in 2017, as the Group negotiates most of its contracts for a full year.

In line with its strategy, in the soda segment the Group also develops two other business areas: sodium bicarbonate and salt. CIECH’s German plants are implementing an investment to boost the production capacities for sodium bicarbonate, including the soda used for haemodialysis in treating kidney diseases. In the salt business, we are working vigorously to build a modern warehouse for salt products and to expand production lines with the prospect of introducing dishwasher salt and salt licks for livestock to CIECH’s product range. CIECH Group is now one of the leaders in the fast-growing market for salt products in Central and Eastern Europe, and Scandinavia, and our efforts concentrate on further increasing the market share. 

Positive results can be already seen in the organic segment. Although the plant protection chemicals market is shrinking, CIECH Sarzyna manages to increase its revenues repeatedly. In the season that ended in September 2017, sales grew by approx. 20%, which also means a greater market share. Currently, the company has about 20% and 40% shares in the markets for herbicides and glyphosate-based products respectively. In addition, new plant protection chemicals are being registered in Poland and abroad, accompanied by intense R&D work on new products. In the fourth quarter of this year, CIECH Sarzyna will roll out special fertilisers and new high-margin products as part of its ZIEMOVIT product line (fertilisers and plant protection chemicals in home gardens, allotment gardens and on balconies). 

The fundamental overhaul of the resins business has already yielded results such as a higher return on sales thanks to a change in the customer portfolio and an increased focus on specialised products tailored to specific customer needs. 

In the polyurethane foams area, the Group continues to enjoy high demand from manufacturers of mattresses and upholstered furniture. In spite of the higher prices of raw materials and problems with their availability, the Group has generated higher revenues and EBITDA. By investing in a new warehouse for long blocks of foam in the coming quarters, CIECH’s Foams business will be able to better respond to higher demand. 

Below is a table with CIECH Group’s basic results for the third quarter of 2017:

[PLN million]Q3 2017Q3 2016year-on-year
EBIT margin14,7%18,0%-3,3 p.p
EBITDA margin22,2%24,4%-2,2 p.p.
EBITDA (N)178,4212,8-16,2%
EBITDA margin (N)21,3%24,9%-3,6 p.p.
Net result85,2155,6-45,3%
Net margin10,2%18,2%-8,0 p.p
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