Polish fertilizer and chemicals group Grupa Azoty, SA, Tarnów, reported a group net loss of Pln1.02 billion (approximately $238 million at current exchange rates) for the fourth quarter of 2022, with the EBITDA loss also in line with the preliminary figure of Pln296 million (GM March 24, p. 25).
Fourth-quarter group revenues fell 7% compared with last year’s fourth quarter, to Pln5.12 billion. Azoty said earnings were dragged down chiefly by the Fertilisers/Agro segment, which posted a negative EBITDA of Pln173 million for the quarter, a 5% decrease from the same period last year.
The group also confirmed an 8% decline in full-year net profit, to Pln584 million from FY2021’s Pln634 million. However, FY2022 EBITDA increased 31%, to Pln2.55 billion from Pln1.95 billion last year, while revenue rose 55% to Pln24.7 billion.
“The supply and demand situation in the European fertilizers and chemicals industry throughout 2022 was determined by the consequences of Russia’s military invasion of Ukraine and high prices of raw materials and energy carriers, leading to production cuts by European manufacturers,” Azoty said.
As a consequence of the macroeconomic climate, each of the group’s business segments recorded a significant rise in product prices and a simultaneous decrease in sales volumes, and experienced demand-supply imbalances, the group said.
Operating profits were also negatively impacted by impairment losses on non-financial current assets and inventories of finished goods, semi-finished products, and raw materials (GM March 17, p. 25).
The write-downs on inventories in 2022 lowered group EBIT and EBITDA by Pln428 million. The recognition of the impairment losses on non-financial non-current assets resulted in a decrease of Pln924 million in FY2022 group EBIT.
Looking ahead, Grupa Azoty Vice President of the Management Board Marek Wadowski said the group expects the environment in 2023 to remain “challenging” after difficult 2022 conditions associated with the rapid growth of commodities prices, especially gas prices.
“A lot will depend on inflation trends and on central bank policy, because the Azoty group does not sell products solely on the Polish market,” he said. Azoty expects lower demand in agriculture, as well as for products from its plastics and chemicals segments in comparison to previous years.