Press releases

High prices of raw materials have affected the performance of CIECH GROUP in Q3 2018, key investments are going as planned

Thanks to its global scope of operations, effective use of improved economic conditions in its core markets of activity and consistent efforts to extend its product offer the CIECH Group has managed to reduce the effects of such negative trends as persistently high coal prices or CO2 certificates. As a result, CIECH’s consolidated revenues in the third quarter increased to PLN 882,7 million (compared to last year’s figures), while the adjusted EBITDA amounted to PLN 131 million. CIECH has taken advantage of the current situation in the soda ash market, increasing its market presence in Southeast Asia. Operational integration is underway in the AGRO sector, with Proplan having being acquired last summer. This is accompanied by expansion into foreign markets, supported by intensive efforts to obtain new product registrations.

  • The consolidated revenues of the CIECH Group for Q3 2018 amounted to PLN 882,7 million (compared to PLN 836.3 million the year before).
  • The adjusted EBITDA stood at PLN 132.1 million (vs PLN 178.4 million last year), with a net profit amounting to PLN 26.9 million PLN (vs PLN 85.2 million last year).
  • The Group’s activities were affected by high costs of energy resources (coal, gas) and furnace fuel used in soda production, as well as by rising prices of CO2 emission allowances. The production levels of soda ash were also affected by high temperatures recorded in the summer of 2018, especially for the plants in Germany and Romania.
  • Key investments such as construction of new saltworks in Stassfurt and a project to increase the production capacity of sodium bicarbonate are going exactly as planned. Important dates: the first half of 2019 – the production capacity of sodium bicarbonate is set to increase at a yearly rate of 50 000 tonnes); 2020 – the saltworks plant in Germany is scheduled to start operations. Thanks to this investment, CIECH will move up to third place in the European ranking of largest evaporated salt producers (with a total annual production volume of 1 million tonnes).
  • International expansion: CIECH continues to benefit from favourable economic conditions on the global market: high demand for soda ash accompanied by restrictions on soda ash production in China, favourable economic conditions on the European soda market and stable global market demand for silicates. The most dynamic growth can be observed for CIECH’s product sales to Asia – an annual increase of 30% over the last nine months of 2018.

CIECH Group’s activities were strongly affected by rising prices of raw materials, especially of steam coal. CIECH is Poland’s second largest customer for this type of coal after the energy sector. The coal is used in the CHP plants operating as part of the Group’s soda plants in Poland. There was also a year-on-year increase in prices of gas used as fuel in the CHP plant in Germany. A similar trend was observed for coke and anthracite prices which are used as furnace fuel in soda production. The increased costs in the third quarter were also due to high prices of CO2 certificates. Their average price in the third quarter of 2018 amounted to nearly 19 euros compared to less than 6 euros the year before.

In the third quarter, the global soda market followed the same trend as in the first half of the year. The effects of the new market supply of soda were offset by changes in China’s production capacity due to Chinese government authorities having cut down on soda production for environmental reasons. Demand for soda remained at high levels. CIECH strengthened its market position in Southeast Asia. The growing demand for detergents (light soda ash is used in their production) on Asian, African and Latin American markets was also conducive to CIECH Group’s market expansion. This was accompanied by intensive efforts in Germany to launch a production line for sodium bicarbonate, including pharmaceutical grade sodium bicarbonate. The investment is scheduled for completion in the first half of 2019.

An increasing demand for electrolysis salt which is used in the manufacture of plastics can be observed on the evaporated salt market. Demand for water treatment salt is also growing steadily. The production capacities of both these segments (salt for electrolysis and water treatment) will be further developed as part of the CIECH’s investment project to construct a new production plant in Germany. The Stassfurt plant is scheduled to start production in 2020. The estimated value of the investment is 100 million EUR.

The takeover of the Spanish company Proplan has already brought benefits to the segment of crop protection chemicals, both in terms of improved performance of the AGRO business and new synergies resulting from close cooperation between CIECH Sarzyna and the supplier of crop protection chemicals operating in the Spanish market.

The Resins segment faced high commodity prices and strong competition from Asian manufacturers. On the other hand, CIECH has focused on the sale of specialist products (including resins and gel coats used in the sanitary and transport industries) which generate a higher margin.

The segment of silicates – which are used for the production of precipitated silica in the tire and cosmetics industry – has benefited from favorable conditions on the global market. 

CIECH is an international, professionally-managed Group with Polish roots, with a well-established position of a leader of the chemical sector in Central and Eastern Europe. It manufactures products which are used in the production of articles necessary in 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 the modern approach to business with production tradition which goes back to 1882.

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