Solid results and intensive development in a demanding market environment – CIECH Group has summarised 2018

CIECH Group, the second largest producer of sodium carbonate in Europe and the largest Polish manufacturer of crop protection products (PPPs) and evaporated salt, published its results for 2018. The Group's revenues amounted to PLN 3672.7 million, normalised EBITDA profit to PLN 633.5 million, and net profit to PLN 183.5 million. The costs of raw materials, energy, increase in prices of CO2 certificates, as well as downtimes, decreased the profitability of soda ash production, and the unfavourable weather conditions affected the results of the sale of crop protection products. To a certain extent, these factors were neutralised by higher prices: soda ash - on USD markets - and dry salt. The Group's net result was also affected by a provision of PLN 67.2 million, created in connection with the tax audit of the corporate income tax for 2012 .

At the end of 2018, a new strategy of the CIECH Group for 2019-2021 was adopted, the key elements of which are increasing efficiency, using innovations and diversifying revenues. The results of the Group should show the effects of a significant expansion of the product portfolio in the AGRO business and the launch of a new installation for the production of sodium bicarbonate at the German plant already in 2019.

  • In 2018, the consolidated revenue of the CIECH Group amounted to PLN 3672.7 million (an increase by 2.6% y/y); normalised EBITDA (N) was PLN 633.5 million (a decrease by 21.6% y/y), and net profit - PLN 183.5 million (a decrease by 53.4% y/y).
  • In 2018, the results were influenced by high prices of raw materials, CO2 certificates and energy. The decrease in the soda production volumes was also due to production stoppages in Romania and scheduled shutdowns of both foreign plants of the CIECH Group. Unfavourable weather conditions also affected the results of the AGRO business – the market of plant protection products in Poland decreased by 6 % .
  • The Group spent PLN 617 million on investments, as compared to PLN 411 million in 2017 (including the acquisition of the Spanish company Proplan for PLN 156 million). In 2018, a decision was made to build a new production plant in Germany with a production capacity of 450 thousand tons of dry salt per year, the silicates production capacity grew by more than 20%, and when it comes to the PPP business, the Group took over Proplan, a company with a large portfolio of products and active substances.
  • In 2019, CIECH intends to make the most of the improving economic situation on the sodium carbonate market, develop its product offer in the salt and AGRO segments (thanks to numerous product novelties and access to the markets where Proplan has its share), and also continue with the construction of a new evaporated salt plant in Germany. The Group also started to review available options for two smaller companies: CIECH Pianki and CIECH Trading, and changes its structure and management methods, continuing the process of transformation into a modern and diversified chemical holding.

- Acquisition of the Spanish company Proplan, commencement of the largest investment in a new production plant in the history of CIECH, numerous development projects implemented at the same time, and finally, the development and adoption of a new strategy for 2019-2021 – when it comes to events of key importance to our Group, there were quite a lot of them last. They all share the same denominator – transformation of CIECH into a modern chemical holding company with its business based on excellent customer relations, high efficiency and the use of innovations in everyday operations. Our financial results in 2018, generated in a period of many changes and a challenging external environment, are stable and confirm the strong foundations of the CIECH Group, as well as further favourable prospects for its development. We are transforming the CIECH Group with full support from our strategic investor, thus creating a showpiece of Polish economy - says Dawid Jakubowicz, President of the Management Board of CIECH S.A.

Soda volumes contracted for 2019 confirmed favourable forecasts for this market. Despite the steadily growing exports of the CIECH Group to Asian countries, Europe continues to be its basic market. Higher expected demand for soda on the Old Continent is, among others, due to greater demand for float and packaging glass (which in turn is attributable to the creation of new glassworks in Poland). At the same time, CIECH is actively building its position on some promising markets in Asia and focuses on offering a package of additional logistics services for its customers.

In soda business, the key event in 2019 will be the launch of a new line for the production of sodium bicarbonate at the Stassfurt plant, which will be offered, among others, to customers from the pharmaceutical industry. After the full launch of the new production capacities in Germany, the annual production volumes of sodium bicarbonate by the CIECH Group will be almost 200 thousand tons.

The second investment in Germany is the construction of a new salt production plant. The implementation of this 100 million EUR project is proceeding as planned – production of salt in Germany is scheduled to start in 2020, and the CIECH Group will become one of the three largest evaporated salt producers in Europe.

In 2018, in the area of plant protection products, the product portfolio of CIECH Sarzyna was expanded by 12 new products, including the first products from the offer of the acquired Spanish company, Proplan. The company is also systematically increasing its share of foreign sales (the value of exports has increased 2.5 times over the past three years), the purpose of which is to reduce the negative effects of weather changes on the domestic market. In 2019, the offer of plant protection products is to increase by more than 20 new products, while according to the CIECH Group's strategy for 2019-2021, the share of foreign sales in total sales is to reach 40 percent.

In the resins business, you could observe the effects of trade-related tensions between the US and China, which resulted in the expansion of Asian producers into European markets. Furthermore, as of the spring 2018, there were increases in the prices of raw materials necessary for production of resins (Bisphenol and Epichlorohydrin). In this business, CIECH intends to focus on a specialised offer targeted at some of the promising industries: transport and sanitary.

In 2018, CIECH expanded the production capacity of silicates produced in CIECH Vitrosilicon by over 20%. The favourable growth prospects in this segment are due to the continuing demand for precipitated silica produced from sodium silicates and used, among others, in the production of tires and cosmetics.

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