CIECH able to limit the effects of the economic slowdown in Q2 this year - soda segment with a high margin and good results of the Agro business

In the second quarter of 2020, the CIECH Group generated a slightly higher adjusted EBITDA result ((adj.) EBITDA) than in the previous year (PLN 153 M vs. PLN 151 M)  , while recognising at the same time a decline in revenues by 7% as a result of the collapse of economic activity. A quick response to the economic effects of the coronavirus pandemic and the effective implementation of initiatives taken prior to the lockdown, enabled the Group to generate a higher (adj.) EBITDA margin than a year ago, from recurring operations (22.1% vs. 20.3%). In the challenging environment, the Group continued the implementation of its strategy for 2019-2021, including, in particular, the construction of an evaporated salt plant in Germany, its initiatives to improve production efficiency, as well as a review of assets, which in the case of the Resin business was successfully finalised by the execution of a preliminary sales agreement with parameters favourable to the shareholders. In addition, the Group implemented a number of measures to reduce fixed expenses and improve liquidity at the consolidated level - at the end of the second quarter, CIECH’s cash amounted to nearly 700 million, and the cash conversion to EBITDA ratio exceeded 100%, which is evidence of the high efficiency of business operations.

  • Consolidated revenues of the CIECH Group for the second quarter of 2020 amounted to PLN 689 M, compared to PLN 744  M in the same period last year. The reason behind the decline was the worsening of the global economic situation as a result of the coronavirus pandemic and the shutdown of individual economies.
  • (Adj.) EBITDA from continued operations (i.e. after excluding the retained result of the Romanian plant and the resin business) amounted to PLN 153 M, compared to PLN 151 M a year earlier, and the (Adj.) EBITDA margin calculated using the same method was 22.1%, compared to 20.3% a year earlier. The margin improvement is the result of a quick response to the economic slowdown and focus on improving business efficiency in a demanding environment.
  • On the net level, the Group recognised an accounting loss of nearly PLN 5 M, caused by one-off non-cash events (exchange rate differences, provisions related to income tax). At the end of the second quarter, the Group’s cash stood at PLN 681 M, and in the second quarter it recognised positive cash flows from operating activities of PLN 303 M, it released almost PLN 100 M of its working capital, as a result of, among others, launched factoring activities, and reduced its net debt by PLN 113 M.
  • The net debt to EBITDA ratio continued at a safe level of 2.47 (calculated for the needs of the credit covenants prior to the effective date of IFRS 16).
  • The Group continues the implementation of its flagship investment project - the construction of a new evaporated salt plant in Germany, the completion of which is scheduled for the second quarter of 2021. CIECH is also working on further improvement of its production and energy efficiency, as well as reduction of CO2 emissions.

- The second quarter was a period of unprecedented economic downturn due to pandemic. We responded quickly, and in addition, we utilised the effects of our measures taken before the appearance of the coronavirus, especially in the area of improving production and sales processes and improving financial liquidity. As a result, we limited the effects of the slowdown, and the cost response and flexibility of our sales force enabled us to defend the Group's high margin. The good results of the Agro business acknowledge the legitimacy of the strategy of diversifying CIECH’s operations, and the successful sale of Resins achieved in a demanding period confirms the high competence of our team – says Dawid Jakubowicz, President of the Management Board of CIECH S.A.

In our main business - production and sale of soda - the decline in sales due to the weakening of demand caused by the lockdown was not as pronounced as in the case of other global soda manufacturers. The available data on the export of soda ash from the countries of operation of the largest manufacturers of this raw material indicate a 37% decrease, in the case of the USA or over 20 percent for Turkey. Meanwhile, in the case of the CIECH Group, the volume of soda ash sold decreased in the second quarter by nearly 14%. With the favourable prices negotiated in the contracting of soda prices for 2020 and the rapid cost-cutting measures implemented, the efficiency of the soda segment (including the production and sale of salt) was maintained at a high level (29.6% ), despite the significantly weaker demand for salt resulting from from weaker economic activity, especially in the HoReCa (hotels & gastronomy) segment.

At the same time, more and more sales are generated from the production of baking soda by a new plant in Germany, which was commissioned a year earlier. Currently, certification processes for higher grades of baking soda are underway, and the target level of production from the new plant (50,000 tons per annum) is to be obtained by the end of the year.

In the case of the salt evaporation plant, the pandemic affected the process of implementing CIECH's flagship investment, primarily due to closed borders and offices, which influenced the deadlines for obtaining the necessary permits and the formal progress of work.

In the organic segment (Agro, Foams, Resins), a good quarter for the plant protection product business, as confirmed by an increase in revenues in the first half of 2020 (+43% y/y) and market shares (the highest market share since 2014), enabled us to offset the effects of the temporary production stoppage in Pianki during the total lockdown. Once the economy was unlocked, demand for foams quickly returned to its pre-pandemic levels. In the case of the resin business, the Group sold 100% shares held in CIECH Żywice to the Polish company LERG against the price of PLN 160 M. The preliminary sale agreement was executed in July and its finalisation is expected within a few months.

A slower increase in demand is observed in the silicate production business, the end users of which are manufacturers from the automotive industry.

- According to our prudent judgement, in the case of the soda, salt and silicate business, the economic recovery will take the shape of an elongated U letter, whereas in the case of foams, a strong V-shape reflection can be seen. The remaining businesses are not affected currently by any significant effects of the pandemic. At the same time, as a result of turbulence caused by the lockdown and economic slowdown, we are dealing with a delay in the implementation of the investment programme, however, its extension in the period of market uncertainty does not affect the goals defined in the Group's strategy but only its deadline – adds Dawid Jakubowicz.


A table with basic data on the results of the CIECH Group for the second quarter of 2020 is presented below.


Q2 2020

Q2 2019

y/y (%)

Revenues (exclusive of the Resin Business)




Revenues (recurring revenues, exclusive of CSR’s revenues from soda and Resins)




(Adj.) EBITDA (exclusive of the Resin Business)




(Adj.) EBITDA (recurring)




(Adj.) EBITDA (recurring)



+1.8 percentage points

Net result (exclusive of the Resin Business)




NOTE! The operations of the Resin Business are recognised as discontinued according to the data/figures in the Financial Report for the first half of the year.

Mirosław Kuk, Rzecznik Prasowy Grupy CIECH, tel. +48 723 66 86 86.

CIECH to międzynarodowa, rozwijająca się grupa chemiczna z silną pozycją na rynkach europejskich i globalnych oraz ze stabilnym inwestorem strategicznym (Kulczyk Investments). Firma eksportuje swoje produkty do ponad 100 krajów całego świata, sodę kalcynowaną, sodę oczyszczoną, sól, środki ochrony roślin, żywice epoksydowe i poliestrowe, pianki poliuretanowe oraz krzemiany i opakowania szklane. CIECH wytwarza produkty o najwyższej, światowej jakości, z których powstają artykuły niezbędne w codziennym życiu ludzi na całym świecie. Łączy przy tym nowoczesne podejście do biznesu z tradycją produkcji sięgającą 1882 roku. Od 2005 roku spółka notowana jest na Giełdzie Papierów Wartościowych w Warszawie oraz od 2016 roku, na jednej z największych giełd w Europie - Börse Frankfurt.
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