In 2021, the CIECH Group increased its (adj.) EBITDA^[1] by 24%, to PLN 727 million, which means that the forecast from the spring last year was achieved, despite the perturbations related to the unexpected increase in raw material prices in the second half of 2021. The net profit increased by 128% year on year, to PLN 292 million. Last year, CIECH launched its key investments ensuring the development of its production capacity: an evaporated salt plant in Stassfurt, Germany and a new silicate furnace in Żary, and also continued to expand its portfolio of products from the plant protection chemical segment. It is due to such expansion, among others, that a high growth dynamics could be observed in the Agro business, which, together with the Foams business, generated nearly PLN 900 million in revenues and PLN 180 million in EBITDA. This, together with the growing revenues of the Silicates and Packaging businesses in the last quarter of 2021, entails a systematically increasing diversification of the Group's activities.

• Consolidated revenues of the CIECH Group for 2021 amounted to PLN 3,460 million, which means an increase by 16% year on year. Compared to the forecast published in April 2021, the revenues were 5 percent higher.
• (adj.) EBITDA amounted to PLN 727 million, compared to PLN 585 million a year earlier. Without taking into account the provision for the long-term incentive programme (LTIP) of PLN 51.4 million, (adj.) EBITDA would have amounted to PLN 778 million, i.e. 33 percent more than in 2020. (Adj.) EBITDA margin in this case would have been 22.5 percent, compared to 19.7 percent in 2020.
• Cash flows from operating activities increased by 67% in 2021, to PLN 1,279 million, reflecting the high business efficiency of the Group.
• Capital investments amounted to PLN 747 million, i.e. they were higher by 8% compared to 2020. The completion of the largest investment programme in the history of the Group means a reduction in capital investments in 2022 to approx. PLN 400-450 million.
• The net debt to EBITDA ratio continued at a safe level and amounted to 1.63 (calculated for the needs of credit covenants prior to the introduction of IFRS 16), which allowed for a reduction in financing expenses.

- In extremely demanding conditions, we managed to generate very favourable results, which at the same time crown the three-year period of intensive transformation of the CIECH Group. Our cash flow, generated EBITDA or debt figures confirm the highest efficiency of our businesses, cost control and efficiency in the implementation of processes, including key development investments. We have built a strong foundation for growth in the coming years, even taking into account the material uncertainties that accompany the global economy today – says Dawid Jakubowicz, President of the Management Board of CIECH S.A.

In the fourth quarter, good economic conditions continued on the soda ash and bicarbonate market (soda ash and baking soda) continued, as a result of changes on the global market for this raw material and the new status of China, which for the first time in many years may become a net importer of soda, as well as a high degree of capacity utilisation in Europe. This means a shortage of soda ash and sodium bicarbonate on the European market. At present, soda plants are operating at the currently maximum available capacity.  

In the fourth quarter, revenues from the sale of sodium carbonate increased by 12% y/y, and in the case of sodium bicarbonate – which is a higher margin product – by 17 percent. Throughout 2021, this dynamics improved by 2 and 14 percent respectively compared to 2020.

In the salt business, the new evaporated salt plant is operating at approx. 60 percent of the target production capacity. Currently, the estimated sales volume for 2022 is approx. 350 thousand tonnes.

This was a great year for the Agro and Foams businesses. In total, their revenues were PLN 877 million, and EBITDA was PLN 180 million (the revenues of both these businesses increased on a year-on-year basis by 36%, and EBITDA by as much as 129%). CIECH Pianki is currently a co-leader in terms of sales of PUR foams on the Polish market, and the share of CIECH Sarzyna in the Polish plant protection chemical market increased from 6.1% at the end of 2020 to 7.8 percent at the end of 2021.

In the Silicates business, revenues increased by 73% in the fourth quarter y/y, as a result, among others, of the launch of a modern and energy-saving silicate smelting furnace at the end of October last year. Throughout 2021, the segment's revenues amounted to PLN 238 million (compared to PLN 172 million in 2020). The revenues of the Packaging business also rebounded: in the fourth quarter alone, they increased by 93%, to PLN 27 million. Throughout the year, they were PLN 75 million (compared to PLN 67 million a year earlier).

Carbon dioxide emissions in the Group, compared to the base year (2019), dropped by approx. 5% in 2021. The energy consumption of production, calculated as the consumption of a megawatt hour of energy per PLN 1,000 of revenues, was reduced (by 14% compared to 2019), mainly due to the launched investments and modernisations of the existing energy installations, as well as, measured in tonnes: emission of pollutants (-63% vs. 2019) and waste production (-50% vs. 2019).

Impact of the war in Ukraine

The outbreak of the war beyond the eastern Polish border entails increased uncertainty for the CIECH Group's businesses, mainly in terms of the price and availability of raw materials, such as gas or coal. In line with the CIECH’s policy, any increases in the raw material costs will be reflected in the final prices of products over the coming months.

Global demand for soda continues at a high level and spot prices are trending upwards. The prospects for the plant protection chemicals market are also positive. On the other hand, on the PUR foam market, the condition of the furniture industry, which is exposed to insufficient availability of wood, is going to be an important determinant. At the same time, sales on the Russian, Belarusian and Ukrainian markets are negligible in the scale of the operations of the entire Group (in 2021, they accounted for 0.5% of revenues).

- At present, it is difficult to unequivocally assess the impact of the war in Ukraine on the Group's business activities, since the situation may be changing dynamically. We are monitoring the risks and we are prepared for their possible neutralisation. Despite the growing inflationary pressure, we have proved our efficiency in cost control in recent years, and the completion of the investment programme not only creates space for organic business growth in the coming years, but also means a reduction in the level of investment expenditure by approx. 40% in 2022. At the same time, the mechanisms of business flexibility and diversification introduced in the last three years, combined with the enhanced importance of specialised products in the Group's portfolio, create the ground for further development, even in uncertain times – says Dawid Jakubowicz.

Contact for media:

Mirosław Kuk, Spokesperson 

miroslaw.kuk@ciechgroup.com, tel. +48 723 66 86 86.

^[1] (adj.) EBITDA – adjusted EBITDA, net of one-off events.