Revenues and EBITDA of the CIECH Group with double-digit growth dynamics in the second quarter; the 2021 forecast sustained

In the second quarter of 2021, the CIECH Group generated a 40 percent higher adjusted (adj.) EBITDA than in the previous year (PLN 188 million vs. PLN 135 million), at the same time, it recorded an increase in its revenues by 21 percent (PLN 835 million). Most of the Group's businesses achieved higher results than a year ago, taking advantage of the economic recovery. The Agro business is developing dynamically, as confirmed by both the three-digit growth dynamics of (adj.) EBITDA in this segment and the growing share on the domestic market. The Silicates and Foams segments also recognised high increases in revenues and (adj.) EBITDA. Despite the growing inflationary pressure, fixed costs and expenses continued at the same level, and the high efficiency of the Group's business is evidenced by the fact that this was yet another quarter in which the expenditure under the largest investment programme in the Group’s history was financed from its current cash flows. The good condition of the CIECH Group allows the forecasts of (adj.) EBITDA for the entire year 2021 to be maintained at the level of PLN 700-735 million (after two quarters, the (adj.) EBITDA was PLN 410 million).

  • Consolidated revenues of the CIECH Group for the second quarter of 2021 stood at PLN 835 million, i.e. they were higher by PLN 145 million than in the corresponding period of 2020. Revenues increased in all our business segments. The increase was partly due to the low base effect in the second quarter of 2020 driven by the lockdown and the downturn in economic activity as a result of the pandemic.
  • (Adj.) EBITDA amounted to PLN 188 million compared to PLN 135 million a year earlier, and the (adj.) EBITDA margin calculated in this manner was 22.5% (an increase by 3 percentage points). The margin improvement is the result of the Group's further transformation through, among others, greater share of specialised products and improvement of its business processes. On the net level, the Group made a profit of PLN 9 million (+PLN 14 million YOY), which was due to non-cash one-off events related to the settlement of refinancing.
  • The net debt to EBITDA ratio remained at a safe level of 2.08 (calculated for the needs of the loan covenants before the entry of IFRS 16).
  • The Group continues the commissioning of its flagship project – a new evaporated salt plant in Germany, which obtained, among other things, the ISO9001:2015 certification and systematically increases its production capacity, notably in the promising salt tablet segment.
  • Compared to 2019 (which is the basis for the liabilities assumed in the CIECH’s ESG strategy), CO2 emissions decreased by approx. 5% in the first half of the year. The Group continues its decarbonisation projects: partial replacement of coal with gas at its Inowrocław plant, and the project which involves obtaining energy from the thermal waste treatment installation in cooperation with external partners.

- The optimisation operations carried out for over two years by the CIECH team have brought effects at each level of the Group's business activity. This is evidenced primarily by the financial results for the second quarter, according to which all our key businesses were able to effectively use the favourable economic conditions. This can also be observed in our market shares or the growing importance of specialised products in the product mix. The high efficiency of the Group's operations is confirmed by its cash flows, the amount of which allows for the implementation of the CIECH’s enormous investment programme. Furthermore, the Group’s financial and operating condition is conducive to maintaining the forecast of (adj.) EBITDA in 2021 at the level of PLN 700-735 million. – says Dawid Jakubowicz, President of the Management Board of CIECH S.A.


In the main business of CIECH – soda and salt production – sales increased. However, at the same time the negative effects of the rising raw material prices became apparent, affecting the levels of the margins. Sales of more specialised sodium bicarbonate improved, and in the salt business, we continued with the commissioning of a new evaporated salt plant in Stassfurt, Germany, with target production capacities of 450 thousand tonnes of the raw material per year. Currently, work is underway to obtain certification of individual types of salt: food and pharmaceutical grade salt.


In the Agro business, there is an observable dynamic increase in revenues and (adj.) EBITDA, which amounted to +357% annually. This was accompanied by the growing share of plant protection products from CIECH on the domestic market and the development of the Proplan company, the integration of which with the activities of CIECH Sarzyna allowed for the achievement of visible synergies in the form of, among others, higher revenues and EBITDA of the Spanish company.


There was also a three-digit growth dynamics in revenues and profits of the polyurethane foam production business, which results from the strong market position and reputation of the Bydgoszcz manufacturer, supporting predominantly the furniture segment, but also partly due to the low base effect after a significant reduction in production and demand for foams during the lockdown in the second quarter of last year.


The economic recovery can also be observed in the silicate production business. The position of the CIECH Group as the largest supplier of sodium silicates in Europe will be further strengthened by the completion of the construction of a new furnace worth PLN 80 million, which is to be completed by the end of 2021.


The glass packaging business, in particular, production of lanterns for grave candles, was relatively the last to be affected by the effects of the pandemic, which was related to, among others, the decision to close cemeteries in the autumn of 2020. This resulted in decreased sales and increased inventory at customers. However, notwithstanding earlier complications, the market is currently recovering systematically.


- We observe the increasing impact of rising raw material and CO2 certificate prices on our business, whereas, in the broader economic environment context - the increasing inflationary pressure. These factors will be reflected in the contracting of our products for subsequent periods. We expect a significant increase in the prices of soda, which should enable us, to a large extent, to cover the increase in the cost of raw materials – adds Dawid Jakubowicz. – In the ESG area, we continue our initiatives related to the energy transformation: we are approaching the commissioning of our investment in a gas block in Inowrocław and finalising discussions on the use of thermal waste treatment installations as a source of energy. Recently, we have also signed a letter of intent on the potential use of nuclear energy with Synthos Green Energy.

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