Grupa Azoty has diagnosed potential risk areas that may significantly affect the future financial results of the capital group due to Russia’s aggression towards Ukraine, the company said, among them disruptions in gas supplies, problems with prices and the availability of strategic raw materials, the risk related to the investment schedule due to the lack of employees and the increased risk of an increase in interest rates and a weakening of the zloty exchange rate.
Potential risk of disruptions in natural gas supplies to the Grupa Azoty Group companies. Natural gas supplies are carried out under an agreement with Polskie Górnictwo Naftowe i Gazownictwo, currently natural gas supplies to Grupa Azoty are smooth. The Grupa Azoty Group monitors the supply situation on an ongoing basis. gas and prepares contingency scenarios in the event of a need to limit production in the event of a reduction in natural gas supplies. The situation in this area may change depending on the decision of the fuel supplier and the operator of the national natural gas transmission network, the company stated.
Another risk concerns the price and availability of strategic raw materials for raw materials supplied from Ukraine, as well as from sanctioned countries – Russia and Belarus. This risk concerns the supply of propylene and potassium salt, and its materialization is possible due to lower availability, an increase in raw material prices and logistic problems. The disruptions may also cause the unavailability of other raw materials, but so far has not identified a significant risk in securing supplies from alternative sources, it was also stated.
The Grupa Azoty Group also takes into account the potential risk that may affect the schedule of implementation of investment projects carried out at Grupa Azoty, due to possible difficulties related to the unavailability or limited availability of contractors’ employees as a result of general mobilization in Ukraine.
Finally, the increased risk of an increase in interest rates and a weakening of the PLN / EUR and USD exchange rates as a result of the observed economic turbulence was also pointed out.
In 2021, the share of Grupa Azoty’s sales in Ukraine accounted for 2.2% of consolidated revenue and was mainly related to the sale of mineral fertilizers. Sales to the Russian and Belarusian markets did not exceed 1% of the Grupa Azoty Group’s consolidated revenues. Currently, the Grupa Azoty Group does not sell products to Russia and Belarus, the report emphasizes.
Deliveries to the Ukrainian market are significantly limited due to the martial law imposed on the territory of Ukraine. The issuer’s management board monitors the political and economic situation in connection with Russia’s aggression towards Ukraine on an ongoing basis and analyzes the impact of these circumstances on the activities of the issuer and the capital group, the company said.
A similar risk assessment was also presented by Zakłady Chemiczne Police – a company belonging to the Grupa Azoty capital group.
In 2021, the sales of Police (Grupa Azoty Police) on the territory of Ukraine accounted for 1.9% of consolidated revenues and were mainly related to the sale of mineral fertilizers. Sales on the Russian market did not exceed 1% of the consolidated revenues of Grupa Azoty Police. Police did not sell products to Belarus in 2021, and currently they do not sell products to Russia and Belarus, the company summarized.
The Grupa Azoty Group ranks second in the EU in the production of nitrogen and compound fertilizers, and products such as melamine, caprolactam, polyamide, OXO alcohols and titanium white also have a strong position in the chemical sector, being used in many industries. Its consolidated sales revenues reached PLN 10.52 billion in 2020.
Source: Grupa Azoty Group and ISBnews
Photo: Grupa Azoty Group
