Grupa Azoty finished Q3 2024 with a net loss of $51 million

Grupa Azoty has released its financial results for the third quarter of 2024. The Group reported consolidated sales revenue of 3,085 million Polish Zloty ($690 million) and an EBITDA result of minus 120 million Polish Zloty (minus $27 million), with an EBITDA margin of minus 3.9%. These figures represent an improvement of nearly 228 million Polish Zloty ($51 million) compared to the same period last year. Additionally, the net loss for Q3 was reduced year-over-year by 517 million Polish Zloty ($116 million) to 226 million Polish Zloty ($51 million), down from a loss of 743 million Polish Zloty ($166 million) in Q3 2023.

Over the first nine months of 2024, Grupa Azoty achieved consolidated sales revenue of 9.83 billion Polish Zloty ($2.20 billion), with an EBITDA result of minus 299 million Polish Zloty ($67 million) and an EBITDA margin of minus 3.0%, marking an improvement of 1,058 million Polish Zloty ($237 million) compared to the previous year.

Despite these improvements, EBITDA margins across key segments remained negative. However, they significantly improved year-over-year. The company cites a challenging global and European economic environment that continues to affect the fertilizer and chemical industries with insufficient demand. European producers also faced pressure from imports into the EU, which affected Grupa Azoty’s performance across its main business segments.

Most raw material and energy media prices decreased year-over-year during the quarter, particularly coal and electricity. However, natural gas prices rose by 7% year-over-year (TTF), while unit costs within Grupa Azoty remained stable.

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Agro Segment

In the Agro segment, increased imports of fertilizers from Russia and Belarus led to price declines and reduced sales volumes. Global economic conditions, particularly the influx of cheaper fertilizers into the EU, continued to erode the competitive position of European producers, resulting in further price declines. Average prices for Grupa Azoty’s Agro products were 7% lower year-over-year. Farming activity was also constrained due to broader agricultural market uncertainties, with producers expressing concerns over profitability, weather volatility, and geopolitical tensions. Grupa Azoty recorded a 9% year-over-year decline in fertilizer sales, with nitrogen fertilizers down by 6% and multi-component fertilizers down by 18% (despite an 11% increase in specialized fertilizer sales).

The EBITDA margin for the Agro segment in Q3 2024 stood at minus 4.4%, an improvement of 3.2 percentage points compared to the previous year.

Chemicals Segment

The Chemicals segment saw a year-over-year increase in total sales volume, despite declines in product and raw material prices. Segment performance was primarily influenced by an adverse macroeconomic environment and an oversupply of products from regions with lower production costs than Europe. In response, Grupa Azoty curtailed production in areas such as technical urea and melamine.

The Chemicals segment’s EBITDA margin for Q3 2024 stood at minus 6.7%, a 21.9 percentage-point improvement from the same period last year.

Plastics Segment

In the Plastics Segment, Q3 2024 saw a year-over-year increase in both production and sales volumes, accompanied by a drop in raw material prices (phenol) and a rise in the price of the primary product—natural polyamide.

The market situation across the entire product chain remained strongly influenced by demand and supply trends in end-use markets, which were shaped by challenging macroeconomic conditions. Imports of products (fibers, films) to the European market from regions with a higher cost competitiveness continued, despite logistical constraints caused by the conflict in the Middle East. Due to the persistently difficult demand and supply situation, Grupa Azoty Puławy did not resume caprolactam production in Q3 2024, except for brief start-ups of the installation to process available stocks of raw materials and intermediates.

The EBITDA margin for the Plastics Segment in Q3 2024 was at minus 16.1%, an improvement of 17.9 percentage points compared to the same quarter of the previous year. The results for this segment also include production and sales from Grupa Azoty Polyolefins S.A., which is currently in the installation and start-up testing phase, with a total sales volume of approximately 60,000 tons in Q3 2024.