[Foreign language]
Good morning, ladies and gentlemen. It is my pleasure to welcome you to the conference call of Grupa Azoty. Today's speakers include Marek Wadowski, Vice President of the Management Board, Grupa Azoty S.A., Justyna Majsnerowicz-Grabas, Vice President of the Management Board, Grupa Azoty Puławy, Michał Siewierski, Vice President of the Management Board, Grupa Azoty Police. We also have Mr. Grzegorz Kuberski with us, Director of the Corporate Controlling Department. I'll give now the floor over to Mr. Marek Wadowski to open the conference call.
[Foreign language]
Welcome. Let us start with a summary of the key facts and figures and events in the reporting period. The reporting period of Q3 2022, we extended our agreement with PGNiG for the supply of natural gas. Today, we still supply gas from PKN Orlen. Our supplier is PKN Orlen due to corporate structure ownership changes. Our gas settlements are based on the stock exchange commodities market. High price of gas in a very difficult environment as well as high volatility in the gas market made us temporarily cut production in some of our companies across the group.
At the same time, during these cuts of our production, we still continued our necessary work on maintenance and upgrades.
[Foreign language]
Right now, we have restored production,-
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... achieving full production capacities again. At the same time, it is worth pointing out that after a very challenging period when we had to stop our production, after the relaunch of our production, we published new price list for our fertilizers with significant cuts on our prices.
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Let us move on to the performance of Q3 alone. At EBITDA level, we have reported PLN 276 million-
[Foreign language]
... around 2% less year-over-year. At the same time, we should point out that this period, quarter three, was an extraordinary period for us when we faced a lot of uncertainties in our markets, as well as a period when we, as discussed before, we referred to cut our production.
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At the same time, when we look at our performance for the nine months of the year, our performance is quite solid.
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It's coming in at a very, quite high level, which shows that diversification of our activities brings fruits.
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What is very important in our analysis of the performance of quarter three alone are one-off events. This includes two events due to cuts on our production.
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We resold our electricity which had previously been purchased for our in-house purposes. This electricity has not been used for our purposes, therefore, we decided to resell it, and we reported a high positive figure as a one-off event in the power, for our power activities, for our energy activities. At the same time, we reduced our CO2 emissions due to costs of our production. Therefore, we decided to-
[Foreign language]
... update our write-offs.
As you can see this very slide,-
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... the effect of one-offs was at PLN 65 million at the EBITDA level. A couple of words on our macro environment, our market environment.
[Foreign language]
First of all, we need to emphasize that the third quarter of the year was still a quarter that was affected by Russia's military aggression against Ukraine, and this military aggression war in Ukraine has a number of implications in our macro environment, including high volatility, high uncertainty in the gas market. At the same time, sanctions imposed-
[Foreign language]
... affect international relations. As a summary, it affects negatively both the feedstocks area as well as the production products area for us. At the same time, third quarter was a quarter when we saw a considerable worsening of-
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... forecasts for economic growth, high inflation levels not only in Poland, but around the world.
[Foreign language]
High inflation rate is a problem that is tackled all around the world, across the board. This obviously affects the purchasing power of consumers, and at the same time, we still have to face certain risks related to COVID-19, especially in China. It also has a major effect on our performance, where producers from the Adriatic Sea area are not able to direct their products in their own markets and sell the products in their own markets, so they look at Europe.
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At the same time, we see that global economy faces a downturn. Therefore, third quarter was quite a challenging period for us and this situation is faced by a number of companies, not only Grupa Azoty.
[Foreign language]
The most important externality that affected our performance quite significantly, both in the third quarter alone as well as for the entire period for nine months of the year-to-date, are obviously gas prices. As you can see in this slide, there was a high volatility in the gas market in the third quarter alone. The minimum level was EUR 143.5 per MWh, whereas the maximum level was at EUR 342 per MWh.
Therefore, you see that those levels are very high, the prices are very high, and you can see that the average price of gas-
[Foreign language]
... have increased quite significantly, and also this was combined by high volatility. Therefore, we decided to cut our productions, even though we were one of the very last producers in Europe to do so. Other macroeconomic effects or externalities.
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One more thing to add, we are showing you this slide again.
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We showed it during our conference call when we discussed the first half of the year. The problem of reducing production of output does not apply to Grupa Azoty only. It applies to all the companies across the board in the European Union. You can see quite clearly that all producers face the same challenges and the same problems that I have already mentioned.
Other externalities, macroeconomic problems that are very important for us and affect our conditions are, first of all,-
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... prices of electricity, CO2 emission allowances, and obviously-
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... currency exchange rates and of course, inflation rates, which is important for the consumers. Inflation, the rising inflation rate-
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... is tackled by the state by tightening a monetary policy, therefore by increasing interest rates. This affects obviously the purchasing power of consumers, and this naturally affects the demand for our products.
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This translates into our cost structure. You can see that our costs grew significantly in the third quarter alone, year-on-year.
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The major increase applying to costs of gas in our case, in this quarter, in the th ird quarter, it was at 162%.
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At the same time, our revenue went up as well. However, this was based on cost increases. In other words, it was due to skyrocketing costs. This situation applied to the entire period of nine months of 2022. We are talking about an increase in gas prices, which was even higher. The same applies to an increase in revenues, which was cost-driven.
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In the Agro segment, I'd like to point out here to a major element.
[Foreign language]
That is the fact that the third quarter is always a period where we notice a decline in demand due to the harvest season and field work. At the same time, this period sees a decrease in the prices of agricultural products. You can see it on this particular chart. The margin for-
[Foreign language]
AN fertilizers versus prices of gas went down. This is an effect of seasonality to a certain extent. What was non-standard in this period was the fact that volatility was very high and gas prices were extraordinarily high, which obviously made most European producers cut down their production, Grupa Azoty included.
[Foreign language]
In terms of compound fertilizers, the situation is quite similar. However,-
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... there were certain other externalities that played a role in addition to natural gas. Other feedstocks used in production, for instance phosphates, potassium chloride or sulfur, they also had a major impact on the level of production costs.
[Foreign language]
We can see that the European margin for instance, NPK fertilizers, was negative in the third quarter, which was due to high level of consumption of feedstocks used in the production of these fertilizers. Therefore, the situation here is still challenging in terms of macro effect. A couple of words on the import of fertilizers to Poland. As you can see in this slide, imports went down, especially in terms of AN or compound fertilizers-
[Foreign language]
compared to previous years. However, we should point out that we still see a higher import figures for urea, technical urea-
[Foreign language]
... as well as urea used in agricultural production. In our weather conditions, however, this last fertilizer is not used that extensively. Concerning the price, looking at the price, you can see that, the import level of this particular fertilizer went up.
[Foreign language]
When we cut down on our production, we focused on obviously Polish market. It is worth pointing out at this point, it should be noted that, due to the focus on our Polish market, the access to fertilizers in Poland was not restricted even though we cut our production. A couple of words on the Agro segment alone in terms of its market environment. As I said before,-
[Foreign language]
... the situation was affected still by Russia's military aggression on Ukraine, which obviously brought a lot of challenges which we had to face in the period under review. We were one of the last producers in Europe to cut our production. At the same time, we had to face the lower imports of both nitrogen and compound fertilizers. As I said before, we focused our activities on the Polish market. In the Chemicals segment,-
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... we also had to face a number of challenges related to our macro environment.
[Foreign language]
First of all, we saw quite clearly that the purchasing power of our consumers went down significantly. Therefore, the customers of our products decided to buy less products than before. Until the end of the first half of the year, the demand remained at a quite solid level. However, it went down in the third quarter alone quite drastically.
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We show you the margins-
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... reported in European markets. For titanium white, the margin even went up. However, I must point out that this was not reflected in the volumes. The margins were quite solid, but the volumes in our case were not that significant, therefore, we generated a lower result for the sale of titanium white. In terms of plasticizers, the situation is worsening as well. At the same time, what's very important, we are facing a competition from Asian producers.
[Foreign language]
In China, we see a number of problems in the construction market and the producers that produce both finished and semi-finished goods for this particular market look at Europe, and we have received a number of transports of products which we already produce, such as melamine. We need to therefore face this competition, and we see quite clearly that this situation is a major challenge for us.
[Foreign language]
This obviously translates into our performance.
[Foreign language]
A short summary for the Chemicals segment. As I said before, quarter three was a period when we had to face a number of challenges in this particular area as well, mainly-
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... due to this macroeconomic situation, as well as the lower purchasing power of consumers.
[Foreign language]
In the Plastics segment, the segment is clearly dependent on the macroeconomic conditions and on the market. We see quite clearly that in the third quarter we saw major declines in demand across the board from all the segments of applications of these products. The situation-
[Foreign language]
... improved a little bit in the automotive segment, but was not enough to offset the declining demand across the board.
[Foreign language]
At the same time, we are facing, again, growing competition from Asian producers, suppliers to Polyamide, for instance. High uncertainty in the market is also reflected in the prices of feedstocks. As an example, we show you average prices of Benzene, but they do not reflect the market entirely. We are facing major volatility and major challenges here. For instance, at the beginning of the third quarter, the price was at EUR 788 per ton,
[Foreign language]
... but it went down drastically during the quarter. We have a lot of uncertainties, a lot of volatility. This is not visible at first sight, but we know that we are facing these challenges also in the Plastics segment. As a short summary, in terms of the Plastics segment, obviously this market is still impacted by the very unstable geopolitical situation, which obviously is due to military aggression of Russia against Ukraine, as well as high volatility in terms of product costs and high product costs in general,-
[Foreign language]
... combined with the weakening demand from our consumers. All- in- all, these are major challenges that we had to face in the Plastics segment.
[Foreign language]
Moving on to the performance by segment. As a general summary, we need to point out that in the two areas of our business, they contributed to, positively to our performance in the third quarter of the year.
[Foreign language]
We're talking about the Energy segment. As I said before, we resold electricity which we had not used for our in-house production purposes.
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Secondly, the positive contributor was Compo Expert, another positive contributor, the company that sells their products across the board all over the world, and we must point out that this positive contribution was generated-
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... in both Americas, especially in Mexico and in Brazil.
[Foreign language]
Moving on to our performance for the nine months of the year, the situation here is quite different than for the third quarter alone. However, we must point out that throughout the nine months of the year to date, there was a major positive contributor, and this was Chemicals segment.
[Foreign language]
The Agro segment, as I said before,...
[Foreign language]
was under a lot of exposure and risks in terms of continuing the production, therefore we were forced to cut our production. This is quite clear when you look at the chart on the right-hand side, the decline in the sales volumes year-on-year. This was obviously due to the cuts of our production.
[Foreign language]
In the chemicals segment,...
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... it should be noted that the major contributor, positive contributor to our performance in this particular segment was the sale of urea used for technical purposes as well as the solutions, Urea Solutions.
Almost half of EBITDA generated for the nine months was generated in this area, that is the sale of urea and urea solutions.
[Foreign language]
As I mentioned before, in the third quarter alone, we faced a lot of challenges, both-
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... in terms of our production and our customers, as well as in terms of the feedstocks and the products and the growing competition from Asian producers. All in all, we saw a major pressures in terms of our prices.
[Foreign language]
In the Plastics segment, the situation was quite similar to the Chemicals segment. Again, a number of challenges in terms of the demand, the consumers, as well as the weakening or declining demand combined with high volatility uncertainty in terms of feedstock prices. However, I'd like to point out that our performance, especially for the nine months of the year to date, in the Plastics segment is quite solid still.
[Foreign language]
Moving on to our financial standing at the end of September, it should be pointed out that the net debt-to-EBITDA ratio, our main indicator that is used and ratio that is used in our financing agreements, was at 0.5. That is at a very low level. Our situation was solid, stable. We have secured-
[Foreign language]
... funding for our investment program, especially this applies to the funding for our flagship investment at Polimery Police.
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Moving on to our investments.
[Foreign language]
In the third quarter of 2022, investment figure was at PLN 436 million, less than compared to the previous year. However, this was due to the schedule of investment program.
[Foreign language]
This is not something that you should be concerned about and that we should comment on.
[Foreign language]
In the nine months of the year, our investments were at PLN 1.773 billion, of which 1/2 was spent on Polimery Police. Again, the spending was lower year-over-year. However, this was, as I said before, the progress of work in accordance with the schedule.
[Foreign language]
Our largest investment project, CapEx project, the Polimery Police project, the stage of completion at the end of September was at 97%. At the same time, we introduced-
[Foreign language]
... our brand, our commercial name that will be used to sell polypropylene, that is Gryfilen. That's the name of the brand, and this name relates to the geographical tradition of this region, the region where we operate, where the Polimery Police project is located. I'd like to point out that, the-
[Foreign language]
... polypropylene to be sold under the Gryfilen brand, will include around 30 products, including three main product families, depending on the final application. Homopolymers, copolymers with higher impact resistance, as well as random polymers.
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These products will be used to produce packaging, white goods, as well as in the automotive or pharma business.
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This is important because the applications of these products, which will be produced by the Polimery Police project, is diversified. This will reduce our exposure, the risk we'll have to face in terms of one market or a single market, which could undergo a certain breakdown. This risk is hedged and reduced. This investment is progressing as planned, and the-
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... expected launch of commercialized use is 2023.
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The budget of this project is $1.8 billion.
[Foreign language]
The spending to date is $4 million. The financing structure is shown on this slide. The assumption was that, and we are delivering on that assumption. It was that the capital brought by our partners is 40% and the debt financing was at 60%, and the shareholding structure was updated slightly. Lotos was replaced by PKN Orlen due to the capital ownership structure at Lotos.
[Foreign language]
Moving on to our other CapEx projects investments in progress.
[Foreign language]
Let me focus on one of these investments, and Puławy will comment on other-
[Foreign language]
... investments. I'd like to point out that we have a new energy concept at Kędzierzyn, which assumes that process heat will be used from ammonia facility, will be used to produce electricity-
[Foreign language]
... and the stage of completion of this project is almost 90%.
[Foreign language]
Moving on to our performance by company. I would not like to comment on that because I will give the floor over to the respective speakers. However, I'd like to point out that the performance by company, looking at this table and considering the major challenges in our environment in the market, the performance is at a very satisfactory level. It is a satisfactory level. It's quite solid. However, we can see quite clearly that the third quarter was quite a challenge for our companies across the group.
[Foreign language]
Moving on to discussing and commenting on the performance of Grupa Azoty Puławy.
[Foreign language]
Thank you very much for this introduction. Good morning. I would like to discuss the consolidated performance of Grupa Azoty Puławy Capital Group for the-
[Foreign language]
... third quarter and for the nine months of the year. Third quarter was a specific quarter and very special quarter for the group. We had to take a very difficult decision to cut on our production and stop most of our production facilities.
[Foreign language]
This decision was due to, first of all, the situation in the feedstock market and other externalities as well. In the third quarter, we saw a major increase trend as well as high price volatility of most of our energy feedstocks and petrochemical feedstocks that we used in our production. Mainly, this applies to the prices of natural gas.
[Foreign language]
This quarter was started with the price levels of gas at EUR 140 per MWh, and in August, we saw a drastic increase in gas prices up to EUR 220-EUR 230 per MWh, and we ended the quarter at EUR 100 per MWh. Considering this unprecedented growth in gas prices, at the beginning of July, we decided to cut our production of melamine in the Agro segment down to 20% of our capacity, theoretical capacity. One month later, we decided to stop Melamine production altogether.
[Foreign language]
On August 22nd, we were forced to cut our ammonia production to 10% of our capacity. As a result, we stopped our production in the Plastics segment, as well as most of our products in the A
[Foreign language]
... Agro segment. This production plan, we decided to proceed with that until October, when we decided to relaunch our production in our fertilizer units. On the 22nd of October, we decided to relaunch our Melamine production up to 30% of our capacity, as well as to relaunch our Caprolactam production. Those decisions that we were forced to make, as well as the situation in the feedstock market, as well as the seasonality of our products, determined to a major extent-
[Foreign language]
... our performance in the third quarter of the year, as well as our performance in terms of economic and financial ratios.
[Foreign language]
For the first half of the year, compared to the first half of the year, our performance throughout the period is still positive. Our liquidity and our financial standing are still on the safe side. In terms of our infrastructure, we continued our upgrades and maintenance work in-
[Foreign language]
... accordance with the schedule. During the period when we stopped the production as well.
[Foreign language]
Moving on to our key financial parameters from the perspective of the third quarter, I have to say that despite the cuts on production, our consolidated revenue from sales of our products at the capital group of Grupa Azoty Puławy came in-
[Foreign language]
... at PLN 2.125 million, going up by 60% year-on-year. The major positive contributor to that situation was the increase in prices. At the same time, we saw declining sales volumes.
[Foreign language]
Higher revenue did not offset, unfortunately, higher costs of our activities. As a result, our capital group reported a loss in the third quarter across all our-
[Foreign language]
... result levels. This unfavorable relationship between revenue and costs translated into our performance, and it was due to high costs.
[Foreign language]
In terms of the volumes of our both energy and petrochemical feedstocks consumption,
[Foreign language]
we are talking about 56% up to 60% of consumption year-over-year as a comparison. However, in terms of value, the costs were twice as high as compared to the previous year. Our consolidated EBITDA-
[Foreign language]
... was at -PLN 1 million, going down by PLN 36 million year-over-year. Our consolidated net result was at -PLN 50 million, going down by PLN 25 million.
[Foreign language]
Moving on to the key financial parameters year-over-year for the nine year to date for the nine months. Consolidated revenue for nine months came in at PLN 7.7 billion, going up by PLN 3.7 billion year-over-year. The main contributor to the revenue was,
[Foreign language]
... obviously, were the changes in prices combined with lower revenue from lower sales in terms of volumes.
[Foreign language]
Our performance traditionally were affected-
[Foreign language]
... by the feedstock market as well as changes in cost structure, which was observed in 2022.
[Foreign language]
The consumption of major energy and petrochemical feedstock was at around 85%
[Foreign language]
... for the nine months of 2022. However, in terms of value, it went up by almost 3 x.
[Foreign language]
The structure of costs was affected because one year ago our feedstock costs represented around 70% of our production. However, this year we are talking about a contribution of around 80%. Our consolidated EBITDA for the nine months of 2022 was at PLN 1 billion, going up by more than PLN 800 million year-on-year in terms of the nine months of 2021. Our consolidated net result, net profit, was at PLN 883 million going up year-on-year, which-
[Foreign language]
... considering our overall performance is a very positive result. We need to point to a high increase in EBITDA for our chemical products, more than 3x year-on-year. Our chemical products obviously include technical urea as well as urea solutions.
[Foreign language]
What makes us happy at the same time-
[Foreign language]
... is a very profitable melamine and plastics business in the nine months of 2021. Those businesses reported a loss. Right now, they are profitable. These results are very strong, both in the third quarter of the year and in the fourth quarter of the year already. We are operating in the context of a limited demand across the board. We are operating in very unstable and volatile market situation, and we are under a lot of pressure in terms of imports from Asia.
[Foreign language]
Moving on to our performance by segment,
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... as well as the composition of the financial performance by segment-
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... and their contribution. Agro segment
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... at Grupa
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... Azoty Puławy Capital Group, we're talking about the production of ammonia and urea and urea solutions.
[Foreign language]
In addition to fertilizers, we also have a range of other products, mainly Technical Urea, Melamine, NOXy, LIKAM, as well as other products.
[Foreign language]
In our Plastics segment, we have the production and sale of Benzene derivatives, especially the caprolactam and the energy segment is where we produce and sell our energy products. Let me start with this segment, because it was the only segment that reported a positive result, financial result at the level in the third quarter of the year.
[Foreign language]
In the third quarter of the year, the revenue was at PLN 100 million in the Energy segment, going up by over PLN 100 million year-on-year. Our EBITDA was at PLN 68 million, going up by PLN 53 million. This is due directly to the resale of electricity which had been contracted in previous years, but was not used due to the decision to stop our production facilities in this particular quarter.
[Foreign language]
In terms of Agro segment, our revenue was at PLN 1.8 billion, going up year-on-year. The main contributor here was an increase in costs of sales, especially for our certain products, and the negative contributor-
[Foreign language]
... was the lower sales volumes due to the decision to stop our production.
[Foreign language]
In terms of costs of our production in the Agro segment, they went up by more than PLN 100 million, mainly due to an increase, a major increase in natural gas prices and the unfavorable revenue to cost relation. We saw a decline in EBITDA down to PLN 85 million versus last year, and we reported a loss in, at the EBITDA level at - PLN 56 million.
In terms of the Plastics segment, the revenue came in at PLN 128 million-
[Foreign language]
... going down year-over-year, which was due to reduced production of Caprolactam, which was partially offset by higher prices of our products. In the third quarter of the year, the Plastics segment reported a loss at the EBITDA level at - PLN 13 million versus PLN 5 million reported as a loss last year.
[Foreign language]
In terms of our performance by segment year to date for the nine months of the year, the major contributor in this period was the Agro segment,-
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... accounting for almost 90% of our consolidated total revenue at Puławy, and the revenue of the Agro segment for the nine months of the year was at PLN 6.2 billion, going up year-on-year.
[Foreign language]
When we proceed to the breakdown of this very extensive segment that Agro is, we need to point to the share of non-nitrogen fertilizers of the segment, which were a major contributor to the revenue in the Agro segment. This was mainly due to higher costs of sales of Technical Urea, which was not used for fertilizers as well as higher cost of Melamine, even though sales volumes were lower.
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The contribution of the Agro segment is also at the level of 90% at the EBITDA level-
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... and the EBITDA of the Agro segment came in at PLN 942 million for the nine months of the year, going up by nearly PLN 700 million year-over-year. In terms of the Plastics segment, the revenue in this segment came in at PLN 519 million. We reported higher revenue year-over-year by PLN 135 million. This was directly related to higher costs of Caprolactam sales.
[Foreign language]
Higher Caprolactam prices. At the EBITDA level, we reported a positive figure of PLN 11 million compared to -PLN 19 million last year. We reported a loss for the nine months of 2021.
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Let me emphasize at this point that this is especially satisfactory considering that we were under a lot of cost pressures and a very unfavorable cost to demand relationship in this segment.
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In terms of the Energy segment, again, thanks to resale of surplus electricity combined with high prices in the market, the Energy segment reported revenue from sale at over PLN 200 million, going up by PLN 131 million year-over-year.
[Foreign language]
Our EBITDA performance in the energy segment came in at PLN 89 million, going up by PLN 57 million year-over-year.
[Foreign language]
Moving on to our CapEx projects, investments at Grupa Azoty Puławy. As I said, we proceed with our investment program as planned according to the schedule. In the third quarter, we spent a lot on the project to upgrade our steam boiler unit as well as the power generation unit. For this last investment, we are talking about the stage of completion at 88%. However, I'd like to point to another, our other project, the granulators fertilizers facility. The budget is at PLN 430 million.
[Foreign language]
We launched or brought on stream the first line for the mechanical granulation of fertilizers. In the second half of October this year, we had successfully performed a start-up of the second line for mechanical granulation, and we are planning to complete the entire investment and the project this year.
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Moving on to our global CapEx and total CapEx, our spending, investment spending was at PLN 126 million for the third quarter. Year to date, we have reported PLN 254 million for 9 months of 2022. This figure is closely related to the investment schedule.
[Foreign language]
Compared to 2021, you will see a difference, but this is due to the fact that most spending or major spending related mainly to the power generation unit was attributed to 2021 and not to 2022. In terms of our prospective future projects, we are continuing advanced analysis for the application of environmentally friendly sources of energy in relation to or in accordance with the directions of our growth adopted by the group.
[Foreign language]
Thank you very much for the commentary on your group, C apital group. Let me move on to the performance of Grupa Azoty Police. I'll give the floor over to Mr. Michał Siewierski to discuss the situation at Grupa Azoty Police.
[Foreign language]
V ery good morning to all of you. I will start my presentation with a short summary of major events of the third quarter of 2022. First of all, the adoption of the strategy for 2020 to 2023. We published a current report in this particular area. We decided to extend our agreement with PGNiG for the supply of natural gas. We signed an annex with PKO for the agreement of credit agreement of a multipurpose credit, as well as a cash pooling service.
Our Polimery Police project received co-financing from the European Union. Moving on to our performance for the third quarter of 2022, it must be pointed out that our consolidated EBITDA was at PLN 28 million. Our EBITDA margin was at 2.1%. That is down by 6.4 percentage points down compared to the margin last year. Our net profit came in at 39 million PLN, a significantly lower year-on-year.
Those results were obviously generated in the context of high volatility and high uncertainty, which was due to obviously a sharp increase of feedstock prices, as well as the volatility of their commodity exchange prices, as well as the effects of military aggression of Russia against Ukraine. This obviously affected our performance, both of the company and the group in the reporting period. Our operations in the third quarter of 2021 were also determined by high increases of our major feedstocks that are used in our production processes to produce the products sold by the parent company.
In relation to the third quarter of 2021, we reported, among other, an increase in the prices of natural gas, potassium chloride, phosphates, sulfur, ilmenite, as well as titanium slag. As a result, we saw a major decline in margins, and, I'd like to also point out that our CapEx spending in the third quarter were comparable to our last year's spending.
In terms of our performance for the nine months, our consolidated EBITDA was at PLN 370 million. Our net debt, net profit, excuse me, net profit was at PLN 165 million significantly below the results for the nine months of 2021. Our operations was affected by very dynamic changes in our market environment, mainly due to the geopolitical situation. This growth trend for a number of feedstocks was also important, especially in terms of natural gas, phosphates, ilmenite, sulfur, potassium chloride, and titanium slag affected our revenues.
Our EBITDA margin for the three months of the year was comparable to the one reported for last year. We must, of course, point out that most of our performance, a major part of our performance, was generated in the second quarter of 2022 and not the third quarter. Obviously, the main contributor to our operating result for the nine months of 2022 was the sales of nitrogen products used for technical applications. Our performance was also affected by the volumes of the sales of our products, especially due to a breakdown of our boilers at the energy or power generation center.
Moving on to especially the Fertilizer and the Pigments segment, we have to say that our performance was lower year-on-year. In terms of our Fertilizer segment, the EBITDA came in at PLN 16 million and the EBITDA margin was at 1.3%. In the Fertilizer segment, this reporting quarter was a period when we saw continuing increases of feedstock prices, the feedstocks that are used in our production processes, especially, we're talking about potassium chloride, phosphates, and natural gas, which was obviously a consequence of the ongoing military aggression of Russia against Ukraine.
The average market price of natural gas year-on-year was higher of over 300%. In relation to third quarter of 2021, the prices of phosphates and potassium chloride increased respectively by 161% and 238%. The price of phosphates and potassium chloride also increased in relation to the second quarter of 2022, so quarter-on-quarter.
This high dynamic of increases in production costs translated into an average EBITDA margin for segment, which was quite lower and significantly lower year-on-year. In terms of the Pigments segment in the third quarter of 2021, we generated an EBITDA margin at -4.3%, and the EBITDA level was at -PLN 5 million.
We saw a declining demand which affected, of course, the sales of titanium white. In the third quarter of 2022, we saw a major negative effect of higher prices of both feedstocks and energy feedstocks, and this affected our performance, obviously. Our margins on sales was quite lower, was significantly lower. At the end of the third quarter, the demand went down across the board, especially in terms of titanium white. Also, we had a surplus of titanium white in the European market, and the production was cut by a number of major producers. In terms of our performance year to date in the Fertilizer segment, we saw the level of PLN 231 million, which was significantly higher year-on-year.
The revenue and the Fertilizer segment represented 89% of revenue across the entire group. The Fertilizer segment was mainly affected by the dynamic increases in feedstock prices, especially this concerns the prices of natural gas, phosphates, potassium chloride, and sulfur. Due to these trends, as well as the externalities in the market, we obviously saw higher revenue.
The main contributor to the performance of the Fertilizer segment was obviously the sales of nitrogen products used for technical applications. The increase in margins was offset by the growing, ever-growing costs of feedstocks as well as sales. In terms of this Pigments segment for nine months of 2022, we reported EBITDA at 20 million PLN, going down by 13.6 million PLN year-on-year.
The revenue of the Pigments segment represented 8% of total revenue across the entire capital group. Our operations faced higher prices or growing prices of all feedstocks, especially natural gas, ilmenite, and titanium slag. At the end of the second quarter of 2022, and more specifically in the third quarter of the year, the situation in the European market of titanium white began to change, and we saw major reductions of, in terms of, demand as well as margins. In terms of the volumes of sales of titanium white for nine months of 2022, it was lower than in last year due to a noticeable decrease of demand for titanium white, as well as I said before, a breakdown of boilers in our power generation center or unit.
In terms of our investments, our priorities, flagship investment, at Police and for Grupa Azoty in general, that is Polimery Police. The stage of completion for this project as of 30 th September 2022 is at more than 96% or almost 97%. In third quarter of the year, we continued supply of all apparatus and facilities as well as equipment.
We continued assembly and tests for all our projects as well as automation systems. In terms of the progress of our work, it was at as of 27 th of September, it was at more than 99.99%. It is worth pointing out that we have a number of upgrades. That is, first of all, the upgrade of a power generation station, which is currently at 97%.
The second such project is the use of hydrogen from propylene production to be used in the ammonia production unit, with the stage of completion at around 69%. One other major investment project carried out by the company is the project in which we want to make the production of demineralized water independent of the variable salinity in the Oder River and to increase the possibility of producing special waters. The budget of this project is PLN 108 million, and the stage of completion has exceeded 96%.
For the three months of 2022, our spending on both tangible and intangible assets exceeded PLN 107 million, and this spending included investments related to growth of our business at PLN 43.7 million and maintenance investments at PLN 39.6 million. In the reporting period of 2022, the parent company completed the total of 73 investment projects, both continued and new products. Thank you very much for your attention.
Thank you very much for these presentations. Now I would like to summarize, put in a nutshell-
[Foreign language]
... our performance and our presentation, then we'll move on to the Q&A session.
As we said time and again,
[Foreign language]
... our performance in the third quarter were determined to a major extent by the effects of the military aggression of Russia against Ukraine, which translated into higher prices, as well as high volatility of feedstock prices. As a result, we were forced-
[Foreign language]
... in the reporting period, to cut our production due to significantly higher feedstock prices and costs. At the same time, we should point out that we were one of the last European producers to take such a decision in the European Union. Right now, we have relaunched our production across all our-
[Foreign language]
... facilities. In terms of Melamine, we produce at the capacity of 30%, but for other products we are producing our main products as planned.
In this very difficult and volatile period, quarter three, when we faced a number of major challenges-
[Foreign language]
... in terms of both demand and production, as well as volatility in terms of feedstock prices, we reported still a very satisfactory level of our financial performance while maintaining a very stable and solid financial situation.
[Foreign language]
T hank you very much to all of you for this exhaustive summary of the third quarter of the year. We received a number of questions. Thank you very much for those questions. On the 17th of September, around 70% of your production capacities were off. What is the situation right now? Could you give an estimate, and where have you relaunched your production?
[Foreign language]
According to our estimates, right now-
[Foreign language]
... the production costs relate to around 50% of our production capacities in the fertilizer segment in the European Union. However, this situation is quite dynamic. It is changing-
[Foreign language]
dynamically, and so this number can be different soon. However, these cuts, these reductions are still maintained-
[Foreign language]
... and due to the situation in the gas market, but also due to the improving situation, that is the price levels of gas going down and production is relaunched. But you have to remember that there is a major uncertainty in the gas market, and you have to remember about that.
[Foreign language]
Next question. What is the value of one-off events related to the resale of electricity and what was the number related to CO2 emissions?
[Foreign language]
Mr. Kuberski will answer that question.
[Foreign language]
The effect of one-offs was in total at PLN 202 million, of which 125 for the resale of electricity, which was allocated to the power segment or the energy segment, and the rest, that is around PLN 170 million, was allocated to CO2 emissions.
[Foreign language]
What is the final date of completion for the power generation unit at Puławy? What is the stage of negotiations with the general contractor for that project?
[Foreign language]
In accordance to the current report that we published, our partner in this project, that is Polimex Mostostal, informed us of the expected increase of the entire, of the total value of this contract, as well as the extension of the period for the completion of this project. Right now, together with Polimex, we are analyzing this project and after we have analyzed those elements, we will inform you of the results of those analysis in a current report.
[Foreign language]
Thank you very much. We are running out of time, so thank you for participating in today's conference call. We will have a chance to take part in investor chat with Mr. Wadowski later.