Press releases

The results of the CIECH Group for the second quarter 2018: higher revenues and expansion to new markets

Increased presence in Asian markets, cost discipline in view of growing prices of energy materials and CO2 certificates, as well as development of the product portfolio helped the CIECH Group to gain revenues in the second quarter of 2018 at the level of PLN 933.5 million, which means the growth by 5.7% yoy. Adjusted EBITDA amounted to PLN 172.1 million, and net profit PLN 98.8 million. In the second quarter of the current year, the Group completed, among others, investments in an increase of the silicate production capacity (growth by 20 per cent), it commenced implementation of a project of construction of new saltworks in Germany and it conducted intensive work on the extension of its product portfolio (e.g. in the segment of salt and resins). In the AGRO business, the Group took over a Spanish supplier of crop protection chemicals operating in three continents – the Proplan company, which will help in the future to diversify the sources of revenues in this area.

  • The consolidated revenues of the CIECH Group for the second quarter of 2018 amounted to PLN 933.5 million (as compared to PLN 883.0 million a year ago).
  • Adjusted EBITDA amounted to PLN 172.1 million (as compared to PLN 191.9 million a year ago), and the net profit to PLN 98.8 million (in comparison with PLN 93.1 million last year).
  • Net debt/EBITDA (adj.) ratio for the Group amounted to 1.2 at the end of the second quarter 2018.
  • The activity of the Group was affected by high costs of energy materials (coal, gas), furnace fuel used in the production of soda, exchange rates and the growing price of the CO2 certificates. The costs of materials necessary for the production of things like foams and resins also grew. CIECH is conducting a number of activities aimed at minimization of the negative influence of those factors.
  • Implemented investments: a new factory and new products in the sector of salt, growth of the baking soda production capacity; R&D activity (mainly in the sectors of AGRO and Resins).
  • International expansion: CIECH took advantage of the situation in Asia where, as a result of the tightening of environmental requirements, chemical production is becoming limited in China. This, in turn, limits export from that country to Asian markets. This situation affected not only the soda ash business, the basic product of CIECH, but also opened up an opportunity for expansion in the silicate or resin segment. Moreover, the Group conducted intensive activities in new markets – e.g. in the AGRO business (Canada, Australia) or in the silicate business (USA, Turkey, Indonesia).

    In the second quarter of 2018, we did not slow down the pace: we took a decision on the construction of a new production plant in Germany after start-up in 2020, will give us the third position on the evaporated salt market in Europe, we took over the Spanish crop protection chemical supplier and we finished the expansion of production capacity in the silicate area. In the current activities, we worked intensely on reinforcing foreign expansion - we recognized and used the favourable situation in Asia and effectively entered new markets with a wide spectrum of our products. These activities allowed the impact of high prices for energy raw materials to be partially mitigated, and in combination with the cost discipline, they enabled us to achieve solid financial results.;” says Maciej Tybura, President of the Management Board of CIECH S.A.

    In the first half of 2018, the situation in China had a impact on the activity of CIECH. The chemical production was limited there in connection with the imposition of stricter environmental standards. And China produces a half of the world’s soda – the basic product of CIECH, and after limitation of production, China also limited export of soda to Asian countries. Thanks to effective activities, in the first half of the year, CIECH increased its revenues from export of its goods by 30 per cent yoy. This was possible thanks to dynamic sale of soda, for instance to Bangladesh and to other countries of Southern Asia. CIECH still remains the greatest foreign supplier of soda in India. In addition, the situation in the Chinese chemical industry also affected the global silicate or resin market in which CIECH operates.

    Changes that occur on the Chinese chemical production market have an influence on the global balance of power on the soda, resin or crop protection chemical markets. We were able to take advantage of the favourable situation and increase of our exposure on the Asian market. We have a suitable level of production, quality and customer service know-how to compete on the global market effectively. This is also confirmed by entering new markets in the AGRO or silicates business” adds Maciej Tybura.

    In the salt segment, in addition to the taking of a decision on the construction of a new production plant in Germany, work continued on the extension of the product portfolio (salt licks and salt granules).

    The results of the AGRO business were affected by weather conditions. Farmers used crop protection chemicals to a lesser degree because long winter shortened the season, and high temperatures in the spring prevented successful application of herbicides. In consequence, the whole national market of crop protection chemicals noted another drop in the value of sales. That is why CIECH is building its position in the international market (export to North America and Australia), and the aim of diversification of sources of income in this segment is supported by the acquisition of Spanish Proplan for more than EUR 40 million. The purchase of that company will help the CIECH Group to enter the new markets and will give it access to the portfolio of active substances and registration of products – key intellectual values for the development of the AGRO business outside the borders of Poland.

    In the segment of resins, we noted the growth of sales of specialized and high-margin products. Investment was completed in the line for production of died epoxy resins used in construction and roads sector. Modernizations of production lines planned for the following years are aimed at the extension of the product portfolio and increase the presence of CIECH in more prospective market segments.

    In the business of polyurethane foams, market conditions deteriorated: prices of materials grew and there is less demand on the part of the furniture sector. Despite such demanding conditions, production remained at the unchanged level, and revenues turned out to be higher than a year ago.

    Good prospects are faced, on the other hand, by the market of silicates used, among others, to produce precipitated silica used in the tyre and cosmetic industries. In the spring of this year, CIECH increased its production capacity by 20 per cent, becoming one of the largest silicate producers in Europe.

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

    CIECH to międzynarodowa, profesjonalnie zarządzana grupa z polskimi korzeniami, o ugruntowanej pozycji lidera w branży chemicznej w Europie Środkowej i Wschodniej. Wytwarza produkty, z których powstają artykuły niezbędne w codziennym życiu ludzi na całym świecie - nowoczesne wyroby o najwyższej, światowej jakości. Korzystając ze wsparcia wiarygodnego inwestora strategicznego (Kulczyk Investments) realizuje strategię globalnego rozwoju, rozszerzając sprzedaż na światowych rynkach. Łączy przy tym nowoczesne podejście do biznesu z tradycją produkcji sięgającą 1882 roku.

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