Earnings Call: Q4 2020

Apr 16, 2021

It will summarize the year 2020 that our group, Copasotto, recorded a consolidated revenue from sales at PLN10.5 billion and a solid EBITDA at PLN 1,300,000,000 with EBITDA margins at 10.6%. Net profit in 2020 came in at 355,000,000 down year on year. However, we should stress that it has been or it was a record breaking year in terms of revenue, I'm speaking about 2019. The pandemic prices in 2020 turned out to be better than expected and recorded lower performance year on year. However, it was still in line with our expectations. I will discuss it in more detail I'd like to, 1st of all, present the management board of the Capital Group Mr. Mario Shkrav, Vice President of management board, Mr. Sergey Prezegorzczyk, Vice President of the Management Board, who joined us on the 15th December last year. Mr. Dragosz Kanzurezki, Vice President of the Management Board and a member of the Management Board, Mr. Artur Kopech and myself Speaking to you, Tomasz Hunevich, Vice President of the Management Board as well as Personnel Management Board of G. A. Puave. Major events in development of 2020 includes, 1st of all or includes, 1st of all, the facts And overall comment that we have finalized at the beginning of this year, last year's negotiations with the Mahopolska Regions Authority on the agreement to cooperate closely to Advanced Air and Climate Protection goals and our undertaking was to reach climate neutrality in our production units as well as our activities conducted in the Malpowska region. This will include a far ranging work in order to protect the climate as well as creating a wider potential for renewable energy sources, which will be mapped as well as a network of eco of advisors on climate issues as well as the activities taken to promote and improve energy efficiency of our units. We will strive to achieve this climate neutrality and also circular energy target at the same time trying and striving to improve the efficiency of our production unit, for instance, in terms of In order to meet the expectations of our shareholders and stakeholders as well, we have introduced advanced production processes and advanced products classified in line with our classifieds apart of the so called green chemistry, the directions which we are pursuing. We have also intensified our activities in order to deliver goals in line with the European Green Deal objectives, including the Fost Farms production line, which are modern and eco environment friendly NPK fertilizers, which provide Nutrien in a rational way and efficient at the same time. This, as I said, is in line with the requirements of the European Green View. And we also revamped our presentation of our products. And also Across the group, we have revamped our approach to sales of fertilizers. The Fost Farm line is a line of compound fertilizers, which will be manufactured in line with The rules of both circular economy and also sustainable development. They are enriched with calcium, magnesium and sulfur and also Macronutrients such as copper and zinc. And calcium, magnesium and micronutrients entirely from regenerative sources. We have also cooperated with which was rebranded maximizing the benefits of the strong brands and the brand potential of Grupa Hazotto. In order to meet the directive to reduce ammonia emissions into the atmosphere, we have introduced a new product, Fuleria plus Ni or This is urea containing an inhibitor. In order to meet the requirements laid down in the directive to reduce ammonia emissions into the atmosphere and is an authority to implement that directive into the published legislation, which is also in line with the European Green Deal and compliance with its requirements and targets. Those products will allow us to reduce our emissions and the application of urea containing an inhibitor, as we have mentioned previously, will be a requirement in Poland as of August 1, 2021. But this product has already been offered at Grupa Azotel for several months now. This is a result of our R and C cooperation between the severe and at Tarnos and also our subsidiary, Grupoijo and Otterho, together obviously with the key companies of the group, Akpazil, Plovio and Polise as end customers of this product. So a part of this technology was taken over from Compel Expert, RCCD, which is yet another example of intra group Other major developments in 2020, Grupozzot supports farmers in soil testing using scanners, soil scanners, agro cares. Using those scanners, we can perform quick soil analysis for farmers all around Poland and then have positive experience With this technology, all group representatives working with farmers across the country will be equipped with such soil scanners as of this year. Thanks to those scanners, the resulting soil analysis report will be available and sent over to the farmer's telephone within just minutes after the test. And therefore, the farmer will receive precise recommendations regarding mineral requirements for each part of the farmers plan. As a result, the farmer can immediately take action in order to appropriately apply appropriately to selected group, as of the group fertilizers with a specific nutrient, this agrotechnical tool in Together with the Pacific software, they'll be able to control the fertilization of their crops. And obviously, this will result in better quality of crops and also better crop protection. This is also a response to the requirements of the European Green Deal, which will call for The revamping of the economies in terms of agriculture into more pro ecological economy. Also started decommissioning and pre commissioning of the facility for the production of ammonium nitrate based granulated fertilizers And the capacity of the Tuniu line is approximately 2,600 tons per day, which is 8200,000 tons per year. This is the total capacity. This will meet requirement from large agricultural farms, agricultural producers, the budget was at PLN 340,000,000 and the production line for ammonium nitrate based granulated fertilizers And for ammonium nitrate and calcium ammonium nitrate will have the production capacities of 1200 tons and 1400 tons respectively. Applying granulated fertilizers will improve the efficiency, especially for large area firms, which translates directly into the carbon footprint. Besides the product, it's also preferred by our foreign consumers and customers. And also the demand for such advisers is expected to grow, continue in Poland as well. Grupo Azote continuously and actively has partners still partners with the Wukasiewicz network. And we are proud to say that we have joined the Wukasiewicz Index, which aims to promote listed companies engaging and devoted to R and D activities. And the index includes a listed company of the Warsaw Stock Exchange of the regulated and alternative markets, new connect market, which cooperate with the Uka Shevich R and D network. The list was announced in April 12 this year, but the index quotations have been published every day. And one of the requirements to join the index was to Corporate with network as of 1st April 20 '19 up to the 31st January 2021. And we have met that condition because we have We have partnered with the West EBIT network since it's very inception. The next slide presents and discusses The impact of COVID-nineteen pandemic. Our measures have been commented or our performance has been commented 4 months because the pandemic period has been the period of special mobilization As a socially responsible company, we want to be a major support for local communities as well. We have donated as a group in general in 2020 more than PLN4,200,000 PLN, which was donated to the institutions measures fighting the pandemic. Obviously, in close partnership and cooperation with the Ministry of Health and also the Ministry of State assets, which coordinate those efforts. And I would like to extend my gratitude to this very Great. This is good cooperation, very fruitful cooperation and the approach of the minutes of both ministries, thanks to which we were able to reach All those in need in terms of the fight with the pandemic like hospitals and other medical centers. These were both monetary and in kind donations, including specialist medical equipment and medicines and also the supply of or the transport of the patients to hospitals as well as the supplies. Group companies are also actively employing the available technologies in order to produce those products which will minimize We have also renters or made available vehicles to transport both temples and also the medical personnel. We have also made available containers in order to take samples. So there's been a lot of measures that we have taken in order to proactively combat the Our ESG measures and activities, these are concrete figures, Including the highlights. For instance, a 10% reduction of the requirement implement for energy generation fuels. Grupo Evotel took a number of actions in order to improve our production processes and energy efficiency. And thanks to that, We have reported a major decline in the consumption of energy generation fuels, for instance, by updating and improving our production processes, replacing our current units and facilities with more Energy friendly and energy efficient, 1, which translates directly in the reduction of also CO2 emissions into the atmosphere. Grupo Azote takes great care in order to meet all the legal requirements and norms in terms of emissions and we are doing our best continuously to adapt our installations and facilities to those standards, taking great care as well in order to meet all the norms of atmosphere protection against emissions. We have also saw we have also seen other positive impacts on the environment in terms of the emissions of nitrous oxide going down 20% year on year as well as CO2 going down more than 17% versus 2019 as well as a 5% reduction of overall waste volumes. Same applies to PM2.5 emissions. Moving on to Polymer projects, a historical investment in terms of for both Azofre and Grupo Azofre and Hyundai, our general contractor, reported at the turn of February March that the project came at its halfway point that is reached a 50% stage of completion. This is great news for us. We are halfway through, and we are talking about all the processes, including procurement, engineering, construction, transport as well as the deliveries and supply of apparatus and equipment. And we have successfully and consistently received those deliveries at the construction site, including reactors to produce polypropylene. As I said, in general, all these activities came at a halfway point at 50% stage of completion already. In terms of major of the Polymeri Poliza project on January 7. We had a formal handover of the construction site of the general contractor Polymeri Poliza. On September 29, 2020, we have received we received the last 2020 building permit. This is a major scale of the project. This approves the major scale of that project only by looking at the number of the building permits we needed to receive. On October 9, 2020. We had to sign and this is the pandemic, we had to sign execution we had to sign the amendment to the EPC contract providing, among other things, for a euros €30,700,000 increase in the contract subsidy and also a 3 month extension of the timescale of the project. However, As a rule, the value of the project, the entire amount of the project should be in line with our expectations and the budget. On May 31, 2020, we executed an investment agreement as well as KIND. And a consortium and a syndicated or a syndicate of banks. On this slide, you will see the amount of the term loan and other facilities. This indicates includes a number of banks and these are also listed on the slide. On November 16, 2020, The district original court signed or recorded the increase of our Capital. And as a result, Grupa Azotepolica, Shareholding structure is as follows Grupo Azope and for it enhanced 34 0.4% of our shares of the shares. Rupaul Sotessa holds 30% and LOTOS and Heads in Kind hold 70% around 70% both. The next slide, the next couple of slides presents a couple of pictures showing the progress of the polymericoliter project works. Moving on to the next part of our presentation, green chemistry. Have selected a number of projects, flagship projects, for instance, the blue hydrogen project Because nitrogen hydrogen will be a side product of the production of propylene. Therefore, we'll be able to reduce our CO2 emissions from the ammonia unit installations and also use the byproducts. Therefore, we'll be able to direct the stream of hydrogen from PDH to ammonia at Polyther. The blue hydrogen is based on conventional energy sources. However, it reduces the emissions in terms of CO2 emissions through the use of hydrogen from and directed redirected from other processes and also reduction of gas usage. As a result, we'll be able to reduce our emissions and also utilize byproducts. The H2 product, which is dedicated to the automotive industry, is another flagship projects, as part of this project in the laboratory of at Kondjeresin we are developing alternative fuels and also analytical methods in order to analyze dedicated hydrogen for the Automotive business. This project is in progress as well. So you make assets And this project involves the development of technologies for the production of human substances, improving the quality and productivity of soil. And in 2021, we plan to launch those products, human assets in the market in order to increase the efficiency of selected fertilizers produced by Rupa Adoptis. The pilot production plant will be launched in the Q2 of 2021. Ureasem Netrification inhibitor projects carried out by Grupo Agiopi Holjo, which is our subsidiary in line with the NEC directive as of August 2021 will be There will be a ban on the use of UVA of this particular chemical substance. So we'll be ready to meet those requirements within the time scale provided. The phosphorus in Plantation Fertilizers based on biomass. This project includes the use of biomass The right raw materials in our fertilizers and thereby using byproducts containing phosphorus in and this project will be launched in 2021 as well. Or will also have micronutrients in fertilizers and other projects. Another project which will involve the use of micronutrients such as copper and phosphorus copper, zinc and bonds and the use of waste derived materials, thereby extending our fertilizer portfolio and expanding our footprint on new market. Those additives will be also used in forest areas and they will be based on waste and waste derived, there will be waste derived products. Obviously, plastics recycling is another project based on polyamide and Grupa Azote as a company that introduces polyamide into the production of packaging, we'll be able to partially meet the requirement for the plastics for plastic cycling. As I said, partially, the projects await the investment decision, which I believe will take place shortly in a couple of days to come. Biodegradable plastics, the goal of the project is to develop the technology of biodegradable plastics at Hozu. We have had a number of successful trials And the launch is expected to take place in 2021 as well. The carbon footprint The next the carbon footprint production is the next project. And also the last but not least, we have another project waste of fuel process based on polyurethanes and coal sludge to produce energy generation fuels in order to manage our waste and consistently reduce CO2 emissions, which is our major goal and overriding goal in every single process across the group. This project is awaiting. This project is in progress. Sequestration is another project, which will provide which will enable us to introduce CO2 stream from the ammonia plant to the depleted natural gas deposit of it under a pilot project from our ammonia plant. The depleted natural gas deposits are located in Polize. The time line for this project is 3 to 4 years to come. Right now, the deposits are being analyzed and examined in order to assess the feasibility of introduction of CO2 stream to the depleted natural gas deposits. We expect that this project will allow us to reduce CO2 emissions in the production of ammonia by about 60%. Catalyst is another project and there's more obviously which I could discuss. But now I'd like to move on to our consolidated financial results and In terms of our finances, 2020 was the pandemic year and this situation put a lot of challenges ahead of However, I believe that Grupa Azote as a group managed reached solid, very solid consolidated results. All major group companies have reported positive results. This is a proof that our measures taken in the context of the pandemic allowed us to meet those challenges, those challenges of this new unprecedented And in our opinion, the definition of the management board, the measures that we have taken, the annual measures that we have taken will minimize the impact, economic impact of the COVID-nineteen pandemic, which could affect to the continuity of our operations To the group part of the group remaining a functioning and going concern. As you can see on this slide, our results were quite solid. And especially in terms of net profit, both for the parent company and also Huabe Polite and Compo Expert was higher In comparison with 2019. The same applies to quarter 4 of 2020. As you can see, our major companies closed the last quarter of the year with solid and positive results. And the end of the year was a period that brought a lot of concerns to us because the scale of the pandemic went up again after a slowdown a quarter before. However, it turned out that quarter 4 was pretty solid for us, And we have managed to show a net profit, as you can see in the last column, for every major company across the group. Our products are sold around the world. The major market Obviously, it's obviously Europe. For logistics reasons, Around 50% of our sales is located in Poland And followed by European Union Countries and other European countries, thanks to the acquisition of Grupo Group and also the synergies upon on consolidation. We are also present around the world in other continents. In summary, we sold 50% of our products agro products in Poland, 50% in general. However, in plastics, the majority of our sales came from other European other countries foreign countries. The slide presents our standing versus the competitors. As I said, the revival of the Q1 of 2020 allowed us to increase our consolidated revenue by 4% versus the previous quarter, Combined with the support that we received in terms of both compensation and also remedial measures, It allowed us to increase our EBITDA by nearly 50% or 48% versus The previous year and the versus quarter 4 previous year. I will discuss it in more detail in the slides to come. I have received a lot of questions concerning this matter. Therefore, I will be answering your questions from yesterday and today in the morning, and I will try to receive to answer them as I speak. Macroeconomic factors presented on the next slide. Polish economy rebounded quite nicely after a drop or a sharp decline in economic activity due to the lockdown and the pandemic According to the estimates of European Commission, the GBP in real terms went up. Due to higher exports and also due to consumption from households and the economic balance, the trade balance. The last quarter of the year unfortunately was a major challenge as new infections went up sharply and limitation in economic activity had to be introduced again in order to contain the spread of the pandemic. This unfortunately muffled the economic activity, especially in certain businesses in sectors. As a result, Q1 of the year unfortunately showed a drop in GDP. Inflation in Poland in 2020 went up sharply or noticeably, especially due to higher prices of services and food. There was also a certain role played by the increase in administration fees, for instance, for the removal of waste, household waste and industrial waste and also prices of energy. Moving on to, in effect, an impact of the pandemic on the chemicals by segment. The COVID-nineteen pandemic had no significant impact on our assumptions in terms of the production and contract based sales in the agro segment, which turned out to be the most resilient segment for in the very difficult period of the pandemic. Obviously, we had certain impacts due to, for instance, closing of the borders. This was a major or this was a challenge for us in terms of our logistics. However, Those restrictions and limitations were pretty local and the same applied to quarter 4, not only to the entire year 2020. On the other hand, The prices of major crops went up by around 16% to 20% year on year. The production of plastics, on the other hand, is directly connected to Electro and Axomopaths segments, and these were the segments that were mostly affected by the pandemic with a number of plants closed down. The restrictions introduced in 2020 resulted in reduction both of both demand for and prices of caprolactam and polyamide, in March 2020, we had first news that production units can be could be closed down across all the entire value chain for plastics production. A major drop year on year was reported in the Q2 of this year. After the traditional slowdown in the summer months, we saw a rebound and revival in economic activity. The situation in the plastics business went up or improved and the last month of 2020 brought a continuing revival and increase in demand. Therefore, we are cautiously optimistic looking at 2021 and the quarters to come. Our situation in the plastics business unfortunately continues to be affected by the general difficult economic situation all around the world and the countries which are main markets. This will depend on are continuing measures to contain the spread of the infectious disease, COVID-nineteen. But as I said, we remain to be cautiously optimistic in this area. Melamine produced at Huabu in the early stages of the pandemic. We saw Drop in demand. Obviously, this had an effect on prices as well. But at the same time, global producers We seem to also reduce the supply especially in China and in Southern Europe. However, We saw an improvement in May already. And as far as 2021 is concerned, we are hoping to see An increase in melamine prices driven by high demand and this will also translate into We expect a rebound in margin as well after the very difficult year 2020. For OXXO alcohols, we can say that in April 2020, There was a reduction of the prices due to the downward trend for both propylene and also lower demand due to the pandemic and Its impact on the economy. We also there were also logistic problems related to the timeline timeliness of the supplies to European market, especially from Asia. After the summer shutdowns for overhauls, the demand started to go up and the market improvement of the market situation supports a positive outlook for 2020 As a whole. However, Titanium White was a segment that was impacted. At the very beginning of the pandemic, There was a slump, no marked slump, but the second part of the year and second half of the year saw a rebound and even a very high demand as for this time of the year, higher than expected. So All in all, throughout the year and the scale of the entire year, Pantheon wide was not impacted as much as expected at the beginning of that difficult year. But the impact of the fundamental factors was increased or deteriorated by the fact that we had a pandemic, especially in terms of The requirement for energy and also the prices as well as CO2 emission allowances An oversupply of gas, on the other hand, translated into historically lowest prices of gas even below the breaking point in terms of its profitability. Unfortunately, the 3rd quarter saw other effects lower demand for electricity in the Q1 of the increased demand. As a result, quarter to quarter, Due to the recorded declines in revenue, both The parent of Grupozzo, Preza and also other group companies, We decided to take steps and take advantage of the financial support mechanism under the Act on special measures to prevent COVID-nineteen that is the anti crisis shield 4-zero, especially at the turn of the 3rd Q4 of the year In order to save jobs across the group, we decided to avail ourselves of the financial support. As a result, the support received stood at PLN 45,000,000 in total, most of which we received in the 3rd quarter and the rest in quarter 4. The next slide presents our revenue across the group. Revenue went down by 7%. However, the figure is still solid. The performance and both the revenue figure is solid, especially in comparison with a record breaking year of 2019. On the one hand, And this was due to higher sales volumes in agro fertilizers and also higher prices of specialty fertilizers combined with a weaker demand from The markets where our chemical and plastics products are sold, which I mentioned before, the revenue generated the net profit generated in the last quarter was in line with our expectations and throughout the year as well. And therefore, we believe that it is a solid figure in the very difficult challenging year of the pandemic. Our consolidated revenue went up year on year and the net profit stood at in the Q4 and the net profit stood at €92,000,000 in comparison with a loss reported a year before last quarter of 2019. Our consolidated EBITDA stood at PLN 1,300,000,000 and the EBITDA margin was In keeping with the record breaking margin of 2019, which we are very proud of. EBITDA margin stood at 12% in the 4th quarter going up As you can see on the slide, major drivers of our EBITDA level was the stability in the Agro fertilizer segment. As I already mentioned, this is the segment that served best in the pandemic period. There was also a strong but there was, on the other hand, a strong impact of the pandemic on the plastics segment. Other drivers included the low price of natural gas and obviously, anti crisis shield as well as compensation For the increase of electricity prices, we'll discuss it more in more detail in the slides to come. EBITDA bridge versus 2019, the major negative impact was due to the lower prices and also the cost of TL2. However, it was offset by change in volumes, reduction in cost And also the compensation and financial support received under the anti crisis shield. EBITDA was impacted more by those factors in terms of higher prices of However, lower prices of other key stocks had a positive impact on our EBITDA, Especially in terms of benzene and phenol, propylene and and the major negative price was due to the prices of energy and coal. In the 4th quarter, There was a positive impact of changes in volumes versus Q1 of 2019 and obviously compensation received also under the anti crisis shield. Negative drivers of our EBITDA was due to the decrease in natural gas prices and lower feedstock prices and also lower prices of Other operational activity was the Are the write downs reported in Khoziv and Sharkovol. Your questions concerns a number of the questions concerns the details on the compensation that we have received. Therefore, we are showing this slide, This presents our compensation received and recognized in 2020 broken down into individual companies. The parent company, Grupa, received a decision from the Energy Regulatory Office to award compensation for 2020 for energy under the compensation scheme for energy intensive sectors and subsectors. And as a result, we recognize those amounts as €85,000,000 in other revenue, other operating revenue. And also reduction of energy use costs. You will see the exact amount of compensations received. In total, we received EUR113,000,000. As a result, we reported By segment, you will see that the compensation was received mainly by Agro Fertilizer segment, 65% Chemicals, 25% and Plastics In the 4th quarter of the year, the compensation was recognized as follows: 10,000,000 All in all, we received RUB100 1,000,000 For the Q4. This was a multi aspect, a multi stage process. We need to analyze economic indicators and also technical parameters that is the consumption of energy and also the assumptions in terms of how we can which amounts and what amounts we can compensate for. We have estimated those amounts in our financial statements primarily and then it was verified and reviewed by the auditor, Priyo, also in the context of our assumptions for the year and those amounts have been reviewed and verified. We presented those announced and our preliminary announced and also the estimated performance. I'd like to thank our officers for this hard work and a very smooth calculation in that area. We applied for compensation within the prescribed time limit and we are waiting for a widening decision by the Energy Regulatory Office by September by the Q3 of 2021. All our liabilities under credit facilities loans are met on a timely basis, and there is no threat that we will exceed those time limits. We have umbrella credit facilities combined with real cash pooling both euro and PLN And also a multipurpose facility, which is managed by the Parent company depending on the demand for funds across the group. So we are moving and transferring those limits depending on what is needed across the entire group. We also have 3 limits in multipurpose facilities and also other types of facilities. Our financial standing is solid. There are no major threats or risks that this standing will be will deteriorate in the future. We are meeting the covenants under our loan agreement, the preferred credit facility agreement in order to meet any higher demand. Our net debt at the end of 2020 And net debt to EBITDA was at Moving on to our investments in CapEx projects. We'll continue and continues to So the investments we started in previous years, our main CapEx projects include obviously polymericialis project we have discussed before, the share in that structure accounts for about or more than 50%. Obviously, the construction of a energy unit at Bouave Construction of new units for the production of hydro gases and granulated fertilizers. I will discuss it in more detail when we discuss the situation of Povav and also the new energy project We're also delivering our mandatory CapEx. And the CapEx for 2021 is planned at TRY3.7 billion mainly Based on at that stage of work at Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri Polymeri, we are not only continuing our very ambitious projects, but we're also planning new CapEx projects as we are well able to finance new projects as well. With our long term credit facilities and credit lines and therefore a risk that we will not deliver the plant investment is very low. And pro environmental investments are reduced across the group In terms of the feasibility of acquisition of preferential non bank credit sources of pounds, such as the European Union pounds or the national support programs. The planned CapEx for 2021 also includes The spending on polymer Polita project in line with the timeline of that project. You also asked about the details of our CapEx for 2021, €1,800,000 for the following various projects and for other companies as well around 200,000,000 in other companies, group companies. The structure of feedstock costs is presented on the next slide. That structure remains the same versus the previous year. As you all were aware, gas is the main feedstock representing more than 20% of consumption of feedstock across the group, followed by energy, coal, potassium chloride, phosphate rock and propylene and other, which includes feedstocks accounting for less than 2% such as dolomite, rock, ilmenite We are also showing a detailed breakdown for each company On that slide. As far as gas is concerned, Total gas consumption in 2020 was at 23.2 terawatt hours, most of which was consumed consumed by Grupa Azotel. However, at 10.8 terawatt hour, The gas consumption in 2020 went up across the group as Our facilities, for instance, in Polissa went back to normal in terms of production. We saw the lowest historically lowest prices of gas, that's true in Germany. And also the lowest average annual price Going down by 1 third versus 2019. The record high Stocks of gas obviously due to warm winter and the lockdown period was also reported in 2020, Especially in view of the fact that supplies from Russia through Ukraine could be As a result, We met our targets by 55%, 54%, which put a lot of pressure. And also we saw a lower demand for LNG, which translated into higher supply of LNG offer LNG to Europe. The competition between LNG and pipeline supply dropped down prices below the level of variable cost even for Russia and for deliveries from Russia. Obviously, the production was reduced especially from the U. S. A. More than by more than a half, especially in the beginning of the year. Remaining low in Europe in the 4th quarter. Moving on to CO2 prices. As you probably know, we saw a lot of dynamics in emission allowance prices, which is shown on the chart. However, Grupa Azotel is taking measures on an ongoing basis to lower and And also by purchasing our emission allowances on Other markets, good or favorable market condition permitting in order to balance the risks of those prices on our performance. Especially in terms of The next slide presents Energy Commodities and Electricity Prices and Coal Prices. And the current rise in The prices of fuels and also new emissions, the electricity prices is are going to the level reported in 2018, and the contracts we have secured The required volumes in terms of electricity, we are awaiting for the national regulations on the level of relief for the charges incurred as of the 1st January 2021. As for hard coal prices, 2020 saw rising prices And we are expecting to those parties to remain at the last quarter level. There is a surplus on the Polish market, both on the part of the producers and also customers. We have long term contracts securing the acquired volumes of hard codes and they will also guarantee continuing or continuous deliveries as needed across the group. Moving on to individual segments. You can see a pie chart Showing the percentages. Our major business is the Agro Fertilizers business, which is obviously no surprise with the share in revenue in 2020 at more than 46% and the The acquisition of Compu Fertilizers reinforced our presence in that segment with a 15% share, plastics went down by 2 percentage points versus 2019, which we believe that it's still a slight drop In the very difficult pandemic year, the revenue in the Fertilizers segment in 2020 stood at €6,300,000,000 versus €6,700,000,000 a year before, with EBITDA €1,000,000,000 a year before with EBITDA margin at 12.9% versus slightly higher margin a year before at 14.4%. Those results show that the pandemic did not have a major negative effect neither for volumes or for revenue going up year on year and the stable demand of our deliveries. And despite an increase in the price sale and the prices of gas year on year was also a major driver. However, overall, we were able to remain very profitable in terms of our business. One exception is especially to fertilizers at Contopexpert. Moving on to the Chemical segment. Segments played a major role with adjusted margin at in the 4th quarter at around 50% versus 10% a year before in the Q4 of 2019. OXO alcohols went up year on year and also quarter on quarter by £17,000,000 versus a loss reported in the Q4 of 2019, mainly due to higher decline of propylene versus other products, segment show €50,000,000 in EBITDA with high EBITDA margin at around 14 versus around 12 last year. As a result, in general, Mechanical segments fared well year on year. However, In terms of sulfur, we saw an impact going down by EUR14 1,000,000. But still there is a progress versus the previous year and Melamine with EBITDA At minus €60,000,000 In oxal alcohols, We saw major drops in the prices of oil and NAFDA, especially in the Q2 of the year and a lower demand for petrochemical feedstocks due to limitations and restrictions across the world affected the demand. The only area with a relatively high demand was the production of food packaging and also health protection products with demand starting to rise after the summer period And as the injections of the vaccine program started, demand started to rebound and also it was followed by higher demand across all the Across the OXXO Alcohol segment as well. We will continue probably to see higher demand for plasticizers And the quotations in prices are expected to stabilize this year combined with higher demand. Obviously, much will depend, as you know, on the situation in terms of the spread of the pandemic and Obviously, the limitation introduced in individual countries, which could affect both the demand and in general the economy in those countries. Titanium White was also impacted by lower prices and consumption of gas and lower prices of other feedstocks combined with higher sales volumes going up by around 3% and the problems To contain the spread of the pandemic made a lot of people to stay to remain at home, which allowed us to take overhauls. And also paint our In terms of demand, the demand for Taiceli White, the last part of the year proved to be a surprisingly good period for us. In terms of melamine, contract prices of melamine in the European market went down by nearly 9% year on year Due to lower demand in the aftermath of the COVID pandemic, We saw limited supply from major global producers, especially in, as I said, China and Southern Europe. Producers either stopped or reduced production in their installations and the customers we use to buy stocks, the interest in melamine in Europe went down by 35% in the first part of the year, first half of the year versus previous years. So it's lower demand were taken advantage of by, for instance, Chinese producers when they focused on overhauls in their major production facilities. They also tackled the problem of logistics supplies, for instance, containers. And this also had an impact on this particular segment. Analysts believe that 2021 will see a rebound on margins and prices as well as demand. Contract prices went up this year compared to the end of 2020, they went up by 15%. In terms of plastics, there were signs of A slight rebound, especially benzene and phenol. They were translated into positive EBITDA year on year at 1%. For EBITDA margin still, It was quite low and the impact was quite low. Therefore, we reported a solid EBITDA on the positive side at the end of 2020, the prices of our products went down by around 300,000,000 to 200,000,000 combined with the prices, the decline in prices, which was lower, it translated into lower sales volumes coming down And therefore, our EBITDA reported EBITDA was negative. Our main goal was to deliver supply for the packaging business and also to adjust our supply to the demand and other factors such as the slumping Quick outlook for 2021, both for strategy and investments. As you are we are working on the strategy to include which will include the trend to expect the trends for the energy and the climate action, green deal as well as meeting the humanities needs, especially in terms of pool. In terms of investments, our investments in CapEx projects, as I said before, we are continuing our largest project, Poli Metapolita, already at the half point and in line with the time frame schedule and also the DHP plant at Huawei and a number of other projects, which are progressing as planned. There is no major impact on those timelines in the schedules by the pandemic. Moving on to individual group companies. Starting with Grupo Azopecuave, the consolidated revenue for 2020 stood at BRL3.206 1,000,000. And in the Q4 of 2020, they stood at BRL859 1,000,000 going up year on year by TRY2.5 million that is 0.2%. The consolidated Net profit of the Capital Group stood at 2.15 And in the Q4 of 2020, it stood at CLN 47 In the reporting period, we saw a decline in the prices of most of our products, both for the entire year and the Q4, especially in terms of main fertilizers going down by 14%, 13% and going down by 9% quarter on quarter. And the same applies to melamine prices going down 16% 8% respectively and for capital accident prices going down 20 unfortunately 20% and 11% respectively. Our consolidated EBITDA stood at PLN522 1,000,000 in the entire year and PLN 134,000,000 in the 4th quarter, which was higher than in the Q4 of record breaking year of 2019. Obviously, This was due to low prices of gas and electricity going down by 20% year on year. And also electricity prices, which went up, was partly offset by compensation for energy intensive sectors as I have mentioned before. Those compensations for 2020 were estimated CLN73.3 million for the entire year. Also the financial support seized under the anti crisis shield of PLN 25,500,000 impact as well as the reversal of the impairment loss on our Fixed assets for the cost generating unit agro The agro segment for 12 months of this year, EBITDA of Agro segment went down year on year by around €96,000,000 PLN, Which was mainly due to lower selling prices of our product. But as I said, agro segment was especially stable and was particularly stable and also resilient to the pandemic and its impact also due to or owing to a good situation in the agro cultural business and also the fact that the European Commission maintained or upheld for feedback from Russia. Therefore, we saw higher sales volumes across all the portfolio of our agro products. Other products, just melamine and Red Nocchi reported lower results. For Melamine, I believe that the impact of the lockdown of our economy was mostly visible in the beginning of the year. Customers needed had to stop the production in the second part of the year in the second half of the year. It went up again. However, the prices will remain low. In 2020, our revenue from Bellamy sales went down by around 20% year on year. The same applies to revenue for Red NOC's products, going down by 15%. Moving on to investments in CapEx projects. As I No interruptions were experienced across the group. Our CapEx projects Our CapEx investment is at about PLN3 1,000,000,000 for our Ongoing project, the Ecopetrol expenditure in 2020 was a record breaking PLM 824,000,000 mainly which was mainly spent on the construction of energy production unit and also the nitric acid production unit as well as new nitric acid production unit and neutralization unit Production of new fertilizers based on nitric acid. Same applies to the granulated fertilizers production unit based on ammonium nitrate, which I've already discussed At the beginning of the presentation. And the last investment shown on the slide, we need mentioned that in July 2020, we started the commissioning, pre commissioning of the first production line. As I said, it was attended by Minister of We are planning to launch the sales of those products at the end of the year. We also launched or commissioned the new steam boiler, H2P plant, which should improve the energy intensiveness of the plant and also reduce the emissions of nitrous oxide. All in all, at Pouave, we saw We've moved on major impact and major challenges, market challenges due to mainly The pandemic, which I have already discussed before. However, Our flagship segment, fertilizer segment, shown major resistance. Of course, we saw lower melanin and caprolactam output, but we also received support financial support received under the anti crisis used in order not to release any employees, not in order to protect jobs Across the group, we also received additional compensation for energy incentive sectors. Other major events of the year included the fact that despite all those challenges. The company and the group was not indifferent to A sharp decline of infections due to coronavirus. As I said, we spent major amounts across the group to fight the pandemic in the pandemic, more than 1 Addressed to medical facilities and also to the production of feedstocks to produce disinfectants, which also drove down The infection rate, we also signed a deal with the national agency to use the dry ice our dry ice to protect transported vaccines for COVID-nineteen. We are talking about the temperature of minus 79 degrees Celsius, which is ensured by the dry ice which was produced as well. We also consistently continued our R and D activities, especially as regards to European Green Deal objectives. As I said, Grupo Azotipozlov, our subsidiary and part of Grupo Guapoave intensified work on the new product urea with urea inhibitor as response to the NEC directive, which makes us the first of August 2021. At the turn of the year, Rupa Azote Fosfore, our subsidiary, launched new modern and environmentally friendly line of MTK fertilizers. Fost Farm is the name and these are the fertilizers which are produced in line with circular economy requirements. Thank you very much for listening. And now, I will give the floor over Thank you very much. A very warm one, confirm me as well. 2020 at Brupa Azotepolitel. It's shown on the slides. And you'll see that our performance and our margin in terms of also a net profit were positive despite the very difficult conditions caused by the pandemic and the limitations that is brought with. Both at the consolidated and separate level, we reported higher margin year on year higher performance. And the key was to maintain the continuing trade, logistics and production processes taking into account the global pandemic and its impact. In 2020, we saw no limitations under of our operations due to the pandemic, both for the company and also across the group, nor any major impact on the key processes even though our company also operates in foreign market and imports a lot of products from or as a feedstock from abroad. In terms of sales, we saw no major impact or major negative impact locally and temporarily, which was not significant. There was also no major impact on our employment and headcount across the year. We took action to minimize the impact of the pandemic on our processes. Therefore, we did not use any anti crisis shield support from the government, which is only approved that which only proves our solid financial footing. The activities and measures taken by both the group and the company in this very difficult period was were focused on the It's closed financial in terms of financial terms and we reached a 50% stage of completion. Our consolidated net profit in 2020 stood at PLN124 1,000,000 and the margin EBITDA margin at 5% compared up to 2% a year before. In 2020, we saw consolidated revenue at more than 428,000,000 and throughout the period of the past 2 years, we see that this is a major solid position and performance mainly due to The measurement of derivatives at 26,000,000 Financing, financial operations of polyadenylinib at EUR36 million were the main drivers. You will see the details in the company's financial statements for 20 17. The structure of sales remains the same or more or less the same throughout the year and throughout a lot of years with Fertilizers at more than 80% and pigments at 20%. The consolidated EBITDA stood at €8,000,000 going up by 19% As far as the company's separate EBITDA, it was also higher than a year before at around €15,000,000 Our performance in 2020 was positively impacted by lower prices of feedstocks, especially potassium chloride and gas, which was offset negatively offset by the consequences of a major decline in the selling prices of our product versus 2019, which was in line with general market trends. Our performance was also impacted by higher volumes of sales of 90,000,000,000 products product, compensation for energy intensive sectors and also reversals of a portion of impairment losses recognized in previous years at 13,000,000 segments. So our performance of the group segment, we have 2 major segments, namely Fertilizers and Pigments. In terms of Fertilizers, the revenue in 2020 stood at nearly PLN2 1,000,000,000 which was slightly lower year on year. However, We saw an increase in the 4th quarter year on year going up by 9% to close to TRY503 1,000,000. Our EBITDA went down by 4% year on year. However, our EBITDA margin was flat And compared to 2019. In the Q4, we saw a margin going up by 1% year on year. Our revenue for the Fertilizer segment was impacted by 2 counter trends, namely lower of the average prices of prepaid stocks, lower prices of gas and potassium chloride and higher sales of nitrogen fertilizers. Our performance was affected by the average drop the drop in average sales of our products due to the market situation, but it was also combined by higher sales of our nitrogen products and lower prices of our main feedstocks, which offset that negative trend. And as a result, we generated the margin in the fertilizer segment despite this very difficult year and this very difficult macroeconomic condition, but it was similar to what we Pigments segment reported 360,000,000 in terms of the segment revenue, which was higher year on year with a major increase reported in the 4th quarter of the year versus the Q1 of the previous year, going up by 36% or €23,000,000 Our EBITDA stood at €72,000,000 going up by €20,000,000 versus 20 And our results, our performance in the Pigments segment is solid and relatively high. The Pigments performance was also impacted by the reversal of impairment losses. However, If we eliminate the effects of this reversal, which was about €13,000,000 still our EBITDA and our EBITDA margin would be would remain still low higher than in the previous year. In 2020, we saw lower sales volumes for titanium white versus 2019 by 2.8%. But this was obviously due to a Quick rebound of the Chinese economy after the pandemic we saw in the second half of the year, We saw a major increase in terms of demand for titanium white And starting from the Q4 of 2020, we saw a number of increases in prices, also due to high costs of transport by sea and the import of titanium white from that market to Europe went down And we managed to increase our footprint on that market. We also saw a slight average decline in the prices of titanium white at 3.4%, still lower, but it was still lower than a decline in Europe, which stood at around 6%. All in all, we saw higher EBITDA margin in segments year on year, lower unit costs for the consumption of feedstock, higher prices and amounts of our sulfur sulfate products and also the reversal of impairment losses, which had an impact on our segment business. Our CapEx projects Our capital expenditures stood at more than TRY1.6 billion, of which more than PLN 1,400,000,000 for growth projects in relation to the polymeric polythe project. This is a major project obviously. But as I said before, we need to remember that we have other ongoing projects in the pipeline. For instance, modernization, upgrade of our water treatment or pretreatment unit This investment will allow us to double our production capacities. Other projects include our the upgrade of our main transforming station to increase the amount of electricity which we can source from the network on the grid, which we will use to the Polymeri Olita project. We also have a new storage facility project and the construction of a Kumlox technical gray urea production facility in order to meet the future demand from our customers. This particular investment project is almost finished at 95% of the stage of completion. 2020 also saw more and very intensive work to related to our flagship project, Polymeri Poliza, which is a flagship project not only for Volisa, but also for an entire Rupa Azot Group. As I said, we have reached the 50% point of completion. We are receiving And other equipment which are into the construction of this project and also tanks, Propylene tanks and propylene splitter and also the pipelines Both over an underground pipeline, 5 silos, blending silos and 30 storage silos for polypropylene. We will all in all have 60 silos to store our end product. At the port, at the Polite port, where the future terminal will be located, we are finishing or finalizing assembly work for 2 storage tanks for propane and polyethylene. And also we are finishing the roofing for those tanks and silos and flanks. We are also deepening the water track, which is also part of the Polmare Politzer project. The milestones and the progress of work makes us optimistic in terms of our outlook for Nutrispy Future, but we're still continuously monitoring the situation. We want to be prepared for the worst, any scenarios. In 2020, we finalized the process of financing for the Poli Merepolica project on May 13, we signed major deals and agreements for investments with the consortium syndicate of financing institutions. Grupo Lotos, Hyundai Engineering and Cobian Klein joined The group of our contractors and our facility credit facility The agent, the Cohesa, confirmed that our preconditions have been met conditions President has been met and therefore the financing process was completed. It wouldn't have been possible if we hadn't been so consistent in terms of our steps that we have taken through the issue of shares, which was earmarked The key developments in 2020, as I said, included the following major development related to our flagship Polymera Polytech project. You can see it for yourself on Slide 63. Rupa Adolte Polinca also joined the fight against COVID-nineteen, and we spent PLN1 million for this on this call at the beginning of or since the beginning of the pandemic. We have also partnered with the University of Stetschine and the agreement covers among other things joint research and development projects and implementation of doctor raising internships for students together with players there will invest in a couple of ways to create course of study and to educate engineering and technical staff and implement scientific and R and D projects. The ISB News Agency awarded Dopazos de Polytechnic Hattergard the most reliable one in the fuel of for the successful implementation of the polymeric receptor project. We'll also receive a certificate for a company promoting blood giving, a blood donoring, which was awarded by the Ministry of Health and the National Blood Center. And last but not least, the Central Institute For Labor Protection, National Research Institute awarded the Copa Costa Porricelli Gold Card safe work leader in 2021, 2022, recognizing our performance to improve To conclude, I'd like to thank behalf of the management board, Richard Abertes, Novartis and myself, I'd like to thank all employees across Grupa Azopo Polite group for their involvement and dedication in increasing the value of our group and enhancing its development. We would like to also thank all the members of the Supervisory Board for their involvement and dedication. Thank you very much. I will now take this opportunity to answer a couple of questions. I have received some in the meantime. So in a nutshell, I will read them out and try to answer them. Zak started the projects, so it's €123,000,000 worth of projects and into 23,000,000 worth of projects into in coal. This is a gas based project. This technology is a gas based technology and not coal technology. A question about Huawei, why the upgrade project was extended to 2028, Even though the budget is already at 50%, The project was supposed to be closed until 2024 as far as I remember. We have extended that time line for old asset production lines, And this project involves both an upgrade of the old production lines and also the construction of the new lines. And these part of the projects are progressing as planned. After the modernization of upgrade of the first line, we have gathered experience. And these are lessons learned for us, which we will use in the upgrades of new more lines, but all other work related to the construction of new lines are progressing as planned will be finalizing as planned by 2024. A question on Polita. Polita generated EBITDA at €24,000,000 in titanium white, which was the highest result for in a number of years. Do you believe that we you will still increase that result in 2021? I believe that Mr. Kondjalka described it in detail. There was a reversal of impairment losses, which had a positive effect of PLN 13,000,000 under recognized under other operating revenue. But mathematically speaking, without the reversal, the situation in the titanium white market makes us very optimistic and we can expect that this result will still increase in 2021 and especially Taking into account high demand and also the fact that the price will still increase. Yes, we are expecting an improvement still. This is a traditional period that is the 1st and the second quarter of the year for titanium white sales And I believe that the demand for titanium white will or is or has been at a very good solid level since the beginning of the year. What was your utilization of production capacities of quarter 4 of 2020 versus quarter 1, 2021, do you believe that this segment will be profitable? I believe that we are seeing a rebound in the plastics segment in terms of the demand for our products and we are adjusting our production capacities and utilization of our capacities to the demands and to the needs of the market. We cannot give you any specific data as of now because We are still early in the year. We saw a major improvement in prices and margins of OXO plasticizers. Do you believe that you will see record breaking results for OXO plasticizers in the Q1 of On the first part of the year, the prices of our products on the spot market are growing dynamically and this combined with the stable production output at Kansyazen makes us optimistic that we will see good performance in the Q1 of 2021. Thank you very much for all your questions and for participating in that event. The conference, Gratitude to Mr. Kondjoka for his support. I wish you stay well in this very difficult period. I'd like to thank all the management board all the management members, the supervisory board members members of all management board across the group and also all our employees. Stay well and stay healthy. Thank you very much. Thank you very much from me as well. Stay fine. Stay well.