The CIECH Group, the second largest manufacturer of sodium carbonate and sodium bicarbonate in Europe, the largest supplier of silicates in the EU and the largest Polish manufacturer of plant protection products and evaporated salt, has published its results for 2020. Despite the unprecedented breakdown of the economic situation and the supply chain disturbances caused by the COVID-19 pandemic, at the consolidated level, CIECH generated sound financial results - adjusted EBITDA on continued¹ operations amounted to PLN 613 million, i.e. similar to the previous year. At the same time, the Group experienced a very high efficiency of its business - cash flow from operating activities amounted to PLN 767 million (PLN 232 million more than in 2019), and fixed expenses were lower by PLN 90 million (i.e. by 12% on the per annum basis). As a result, the EBITDA margin on continuing operations remained at the level of 20%. In a demanding environment, CIECH implemented an ambitious development plan in line with its strategy for 2019-2021, mainly the construction of a modern evaporated salt plant with a value of approx. PLN 600 million, in Stassfurt, Germany.

• Consolidated revenues of the CIECH Group for 2020 stood at PLN 2974 million (an increase by 2% y/y). In 2020, adjusted EBITDA was PLN 613 million (an increase by 0.1% y/y), and net profit was PLN 128 million.
• During the pandemic, the Group took care of its financial foundations: operating flows in 2020 rose by 43% y/y, which means an increase by PLN 232 million. Currently, the CIECH Group has PLN 779 million in cash, and the debt is at safe levels (net debt/EBITDA ratio at the level of 2.45). On a consolidated level, CIECH released PLN 257 million of trading working capital through the use of factoring, reverse factoring and inventory optimisation.
• In 2020, the Group implemented investments of nearly PLN 700 million, the largest part of which were funds allocated to the new evaporated salt plant in Germany, which is preparing for the start-up after the main construction work has been completed.
• CIECH also invests in the development of a portfolio of plant protection products, new types of foams produced in Bydgoszcz and FFP3 masks. In 2021, the production capacity of sodium silicates will be increased, which will strengthen CIECH’s position as the largest supplier of this product in Europe.

- In the extremely demanding conditions of 2020, our priority was the safety of our employees. In turn, this enabled us to operate our plants smoothly and to continuously supply our customers with products. We have benefited from the fact that we were well prepared for more difficult times, both in terms of financial and production liquidity and the efficiency of our sales forces. This allowed us to achieve sound results, and we were able to continue our key development investments, and to implement ambitious plans related to decarbonisation, as well as other important initiatives incorporated into our strategy - says Dawid Jakubowicz, President of the Management Board of CIECH S.A.

Better soda results than our competitors, and a good year in foams and agro

Compared to 2019, revenues from the sale of soda from factories in Poland and Germany continued at a similar level. The business proved to be resistant to the economic slowdown, in particular, in the industries that are recipients of the soda produced by CIECH. Compared to our global competitors from Europe, Asia and America, where decrease of production volumes compared to 2019 was double-digit, CIECH soda plants produced only 6 percent² less soda than in the previous year, and the sales margin remained unchanged. Despite the uncertainty related to the pandemic, 2021 contracting was completed successfully for the Group, both in terms of contracted volumes and prices. Very good sales results (an increase in revenues by 13% in 2020, and in the fourth quarter by 24% y/y) were observed in the case of sodium bicarbonate. This was due to achieving the optimal condition of the line and stabilising the production of sodium bicarbonate in Stassfurt, where the variety is manufactured which is used, among others, in pharmacy and medicine, and which has recently received the prestigious GMP certificate.

In 2020, the salt business suffered due to the pandemic and lower demand from the Horeca industry (hotels, gastronomy, catering). This segment buys both table salt and salt tablets for water treatment. As a result, sales revenues dropped by approx. 8%, to the level of PLN 184 million. At the same time, in 2020, intensive work was carried out on the investment in a new evaporated salt plant, thanks to which CIECH will become the third largest supplier of evaporated salt in Europe. The investment in Stassfurt, Germany, is worth approx. PLN 600 million, and its commissioning will last until September 2021. Ultimately, the launch of the salt plant is to increase the Group's EBTIDA result by approximately EUR 25 million per annum.

The AGRO business had a very good year - both sales revenues and EBITDA increased by 25% and 37% respectively. 7 new products appeared in the offer of CIECH Sarzyna for the Polish market. In 2021, this offer is to be expanded by another 10 products, including a breakthrough product based on the patented BGT technology, which allows for maintaining effectiveness while reducing the dose of the active substance. The Spanish company of CIECH is also developing dynamically - Proplan's revenues in 2020 increased by 14% compared to 2019, and EBITDA by nearly 32 %.

In the Foams Business, despite a significant limitation of production in spring 2020, due to the lockdown, the year finished with an increase in revenues and EBITDA (by 3% and 23%, respectively). This is the effect of a rebound in the furniture industry, observed since June 2020. In 2020, the Resins Business was sold to a Polish company, LERG, for PLN 160 million, and the transaction was finalised in March 2021.

The production volume of sodium silicates also suffered from the pandemic and the decline in production, including in the automotive segment. Despite the unfavourable conditions, the EBITDA result of the silicates business continued at the 2019 level (PLN 26 million). CIECH intends to expand its production capacity in Żary in 2021 with the construction of a new furnace for approximately PLN 80 million. 2020 was also successful for glass packaging: EBITDA increased by 22 percent, to the level of PLN 22 million, despite the lockdown in the high season for lanterns used in the production of candles.

Lower emissions

In 2020, carbon dioxide emissions dropped by 6% compared to 2019. Considering the effect of shutting down the factory in Romania, the decrease was much greater, i.e. nearly 26%. In 2021-2025, CIECH expects a free allocation of CO2 certificates of 1.470 million tonnes per annum, i.e. at a level similar to 2020. At the same time, the Group is implementing an ambitious decarbonisation plan, assuming a reduction of CO2 emissions by 1/3 by 2026 compared to 2019. The plan assumes, among others, partial switch to gas, use of thermal waste treatment installations with third-party partners to produce thermal energy and a number of modernisations to improve the energy efficiency of our soda plants. The Group companies will also use photovoltaics on a larger scale.

¹ The Group's (adj.) EBITDA results and revenues quoted in this press release come from continuing operations, i.e. they do not include the impact of the Resins Business or CIECH Soda Romania.

² The comparison related to two plants in Poland and one plant in Stassfurt.