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CIECH Group: Solid financial results in Q1 2017

The CIECH Group generated solid financial results in the first quarter of 2017. Revenue stood at PLN 898 million (compared to PLN 826 million the previous year), and normalised EBITDA (N) amounted to PLN 187 million compared to PLN 206 million the previous year. Taking advantage of the support of a strategic investor, the CIECH Group is consistently implementing the strategy based on organic growth, cost optimisation and the reduction of CIECH’s debt. Furthermore, the company is intensively extending its sales and constantly strengthening its position in international markets. Owing to that, despite more demanding market conditions such as a decrease in the prices of soda ash in global markets and an increase in the prices of raw materials essential for the production, in the first quarter of 2017 the Group generated solid financial results.

  • Consolidated revenue of the CIECH Group for Q1 2017 amounted to PLN 898 million (an increase of 8.7% y/y).
  • Normalised EBITDA (N) amounted to PLN 187 million (a decrease of 9.5% y/y) and the net profit stood at PLN 78 million (a decrease of 23.6% y/y).
  • The ratio of net debt to EBITDA (N) reached 1.5 at the end of the first quarter.

– The first quarter of 2017 was demanding due to the market environment, and at the same time it was extremely busy as regards the planning of further development and increase of the Group's value. Taking into account a decrease in the prices of soda ash in global markets, competition and challenging raw materials market conditions, the results of the first three months of 2017 are sound. In the subsequent quarters we will focus on the implementation of our investment plans, further geographical expansion, maintenance of cost competitiveness, and further increase production efficiency. In 2017, we will significantly increase our R&D expenses, not only in the AGRO business, but virtually in every area of our business – says Maciej Tybura, President of the Management Board of CIECH S.A.

CHALLENGING ENVIRONMENT, INCREASED PRODUCTION CAPACITY

In Q1 in the soda segment, revenue increased by nearly 5% y/y. It was in the wake of the investments made in the years 2015–2016 (Soda+200), which increased the production capacity of plants manufacturing soda ash used, inter alia, in the production of glass and detergents. The first quarter of 2017 witnessed intensive works on further development of special types of baking soda used, inter alia, in dialysis.

In the salt area, sales of products based on dry salt (such as water purification salt tablets) increased. Such products are sold not only in Poland, but also in Scandinavian, Western and Eastern European countries. The CIECH Group manufactures table salt (offered by the largest retail chain stores under the brand Sól Kujawska), industrial salt, feed salt, curing salt, and salt tablets.

– After a successful increase in the production capacity of soda ash, our top priority is an even better customer service and offering additional services, including development of logistics competence. In the light of the expected new supply in the market such activities are very important. At the same time, we are developing our production and sales of superior types of baking soda and salt, having in mind their most specialist applications, for example in the pharmaceutical industry. We are also taking advantage of our position in the market of silicates, polyurethane foams, resins or plant protection products to market new innovative products – says Artur Osuchowski, Member of the Management Board of CIECH.

In the organic segment (AGRO, resins, foams), revenue increased by 17% y/y. The first quarter was beneficial for the AGRO business, which generated positive results owing to effective commercial activities and growing sales in foreign markets. In Q1 2017, CIECH Sarzyna received registration of a new product in Poland (Chwastox Complex) and registration of the existing plant protection chemicals in Iran, Azerbaijan, and Spain. Both CIECH Sarzyna and CIECH Pianki were affected by the consequences of the increasing prices of raw materials essential for production. In the resins area, CIECH Sarzyna is focusing on specialist products with a higher margin. At the same time the results of CIECH Pianki were influenced by an increase in the demand for foams from the manufacturers of upholstered furniture and mattresses, and additionally positive effects are brought by the activities aimed at the optimisation of production and sales at the plants located in Bydgoszcz.

In the silicate and glass segment (CIECH Vitrosilicon), an increased sales of sodium silicate was observed as a result of an increase in production capacity in 2016. Increased production contributed to increased revenue in the first quarter in this segment by 30% y/y. The company also confirmed its strong position in the market of lanterns for vigil lights - this year glass lanterns for vigil lights produced by CIECH Vitrosilicon will be again available in the largest chain stores in Poland.

DIRECTION: INVESTMENTS AND SPECIALISATION

In the subsequent quarters in the soda segment, the Group will focus on the development of specialist products, expansion to new markets (Africa, Latin America) and improvements in customer service. In the long run, the demand for soda ash in the domestic market may increase due to decisions on the construction or expansion of glass manufacturing plants, owned by global tycoons operating in this market, announced in the past few weeks. The demand for flat glass is consistently growing.

In order to improve customer service and sales effectiveness, the Group is building a modern warehouse in its plant in Janików to increase several times the storage space of salt products. The Group is also working on introducing further products based on dry salt into its offer and on increasing the production capacity of salt tablets.

Meanwhile, CIECH Pionki is currently building a new warehouse of long blocks, which will increase effectiveness and is working on extending its portfolio of foams.

In the AGRO business, the Group is implementing significant R&D investments, focused on the acquisition of new product registrations and access to new active substances.

– In the face of stronger competition and raw materials market conditions, our priorities remain unchanged: diversification of revenue sources, development of specialist products based on intensive R&D activities, expansion to new markets, cost discipline, and attention to high production capacity and quality. Effective implementation of our plans should translate into even better relations with customers and growth of the CIECH Group’s value to the benefit of Group's shareholders and employees – says Maciej Tybura.

Contact:
Mirosław Kuk, CIECH Group Spokesman
miroslaw.kuk@ciechgroup.com, phone: +48 723 66 86 86.

CIECH is an international, professionally-managed group with Polish roots, with a well-established position as a leader in the chemical sector in Central and Eastern Europe. It manufactures products, which are used in the production of goods necessary in the everyday life of people all over the world - state-of-the-art products of the highest, world quality. Taking advantage of the support of a reliable strategic investor (Kulczyk Investments), it implements the strategy of global development, extending its sales in world markets. At the same time, it combines a modern approach to business with a production tradition, which dates back to 1882. For more information please visit www.ciechgroup.com.

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