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CIECH Group’s results for Q2 2019: PLN 945 M revenues and PLN 176 M adjusted EBITDA result

Higher prices of soda ash, the basic product of the CIECH Group, a strong position on the salt market and the development of specialised businesses, enabled the Group to generate in the second quarter the adjusted EBITDA result at the level of PLN 176 million with revenues at the level of PLN 945 million. The CIECH Group is implementing its strategy for 2019-2021, the purpose of which is to improve the adjusted EBITDA result to over PLN 900 million in 2021. Such value will be achieved primarily due to development investments implemented in key business areas, aimed at increasing the share of specialised products in the Group's portfolio, production and energy efficiency, as well as strengthening the Group’s position on the soda ash market.

  • The consolidated revenues of the CIECH Group for the second quarter of 2019 amounted to PLN 945 million. Adjusted EBITDA (adj.)1 amounted to PLN 176 million, and net profit – to PLN 19 million.
  • The disclosed results were affected by the creation of a write-down for impairment of assets due to the risk of CET ceasing the supply of process steam and the related preparations for the possible suspension of production at the Group's Romanian plant (impact on the net result at the level of PLN -37 million) and the creation of a provision for the incentive programme launched in the spring for the Group managers and related to the implementation of the strategy for 2019-2021 (impact on the adjusted EBITDA result at the level of PLN -10 million). The (adj.) EBITDA result was also burdened by a weaker result in energy at CIECH Soda Deutschland (PLN -19 million y/y), mainly as a consequence of a lower bonus for 2018 due to the so-called avoided fees for using the network.
  • The Group's operations in the second quarter were positively influenced, among others, by the weakening of the Polish zloty and Romanian lei against the euro and the dollar, gas prices which were lower than a year ago, but negatively - higher prices of energy raw materials and CO2 certificates, 
  • The main operating segments maintain a high (adj.) EBITDA margin – in the soda segment - 25%, and in the silicate and glass segment – 21%
  • In the second quarter, the Group obtained additional financing, as part of its the strategy, in the amount of PLN 500 million for the implementation of its strategic goals for 2021.
  • Implementation of development investments in the area of sodium bicarbonate, salt and plant protection products, improving the efficiency of production processes and strengthening the position on the soda ash market, as well as the development of the product offer in other businesses – these are the main growth drivers of the increase of the adjusted EBITDA result to over PLN 900 million in 2021. 

- 2019 has seen intensive work on the implementation of our strategy and the beginning of the next stage of transformation of the CIECH Group. The main drivers for achieving the adjusted EBITDA result of over PLN 900 million in 2021 will be our development investments, already implemented and launched - entering the specialised sodium bicarbonate market, launching production in a new evaporated salt plant in Germany, or intensive development of products in the agro business and an increase in the share of sales of plant protection products abroad. The second pillar contributing to the Group's increased profitability will be improved production process and streamlined energy sector – a key element for the soda business performance. The third element is strengthening CIECH's position on the soda ash market and intensive activities in the business areas of the Group showing the best prospects, supported by initiatives in the area of innovation in order to increase CIECH's competitiveness in the long run – says Dawid Jakubowicz, President of the Management Board of CIECH S.A.

In the second quarter, the continuing favourable economic situation on the European soda market (higher prices and new investments in the glass production industry) was accompanied by a number of initiatives taken by CIECH in order to increase production efficiency (including energy projects, preparation of Industry 4.0 projects and investments in a new carbonisation column). In June, CIECH commissioned a new sodium bicarbonate production line in Stassfurt - an important element of soda business development based on high-margin products.

However, another crucial event during this period was the termination of the contract for the supply of process steam at the plant in Romania by CET. The proposed significant increase of steam prices (by 135 % compared to 2018) and CO2 certificates in Romania, making profitable operations impossible, was the reason for commencing preparations for the possible suspension of production on 18 September at the factory in Govora. This contributed to the decision to create a write-down related to impairment of assets of PLN 37 million, which, as a consequence, was charged to the net result in the second quarter of 2019. At the same time, the possible suspension of production in Romania should not affect the achievement of the assumed adjusted EBITDA result in 2021, and CIECH Soda Romania is open to negotiations with the steam supplier.

In the crop protection product (CPP) business, the acquisition of the Spanish Proplan company, and the good results generated in Spain, had a positive impact (increase of the Spanish CPP market by approx. 4% y/y). At the same time, the Polish CPP market saw a decrease by more than 6% due to persistent drought. The portfolio of specialised products has been extended in both the foam and resin businesses – including, among others, antibacterial foams and sanitary gelcoat used in the production of bathroom equipment. In turn, the improved revenues and profits in the silicate and glass packaging business was due to the favourable market environment used by CIECH.

1Adjusted EBITDA is an EBITDA result exclusive of one-off effects, which represents the Group's ability to generate repeatable results from its core business operations.   

Contact:
Mirosław Kuk,PR Manager
miroslaw.kuk@ciechgroup.com, tel. +48 723 66 86 86.

CIECH is an international chemical group with a strong position on European and global markets, supported by a reliable longterm strategic investor (Kulczyk Investments). The company exports its products to more than 100 countries around the world, offering soda ash, sodium bicarbonate, salt, plant protection products, epoxy and polyester resins, polyurethane foams, silicates and glass packaging. The company has eight production plants in three European countries - Poland, Germany and Romania. Since 2005, the company has been listed on the Warsaw Stock Exchange and, since 2016, on one of the largest stock exchanges in Europe - Börse Frankfurt. For more information, please visit www.ciechgroup.com.

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