Grupa Azoty SA

WSE:ATT

Earnings Call Transcript 2019-Q1

[Joanna Barnas, executive]

Good afternoon, ladies and gentlemen. Welcome to all of you present in the room and also all our webcast viewers watching us and listening to us online and to the conference devoted to the performance of the Grupa Azoty group of companies in the first quarter of 2019.

Today's speakers will include Wojciech Wardacki, PhD, President of the Management Board of Grupa Azoty and Grupa Azoty Police; Mr. Pawel Lapinski, Vice President of the Management Board of Grupa Azoty S.A.; Izabela Swiderek, PhD, Vice President of the Grupa Azoty Pulawy Group; Mr. Wlodzimierz Zasadzki, PhD, Vice President of the Board of Grupa Azoty Police; Mr. Slawomir Lipkowski, President of the Board of Grupa Azoty Kedzierzyn. I'll now give the floor over to our CEO.

[Wojciech Wardacki, executive]

Thank you very much and welcome to all of you present in the room and also to all our webcast viewers, and welcome to the next conference at which we will summarize our performance after the first quarter of 2019.

Not much time elapsed after we last met -- has elapsed after we last met when we met to discuss -- present and discuss the entire of 2018. At that point, we mentioned and presented certain estimates for the first quarter of the year, and those estimates are well in line and in keeping with the actual results which will be presented today.

Many events that took place in the first quarter have been mentioned already last month. I would like to draw your attention specifically to certain matters and issues, which are of key importance and were of key importance for the Grupa Azoty Group in the first quarter.

More specifically, I am referring to the major CapEx project to which we devoted a lot of time and energy and effort and which have been observed and watched very closely. By which I specifically mean the major investment of Grupa Azoty Group and also a major investment for the entire Polish economy. I am referring to Polimery Police, the project, in progress. I would like to mention again that this project is quite different from what we -- what our predecessors mentioned and announced in -- back in 2015. After a series of analysis, the project was supposed to be completed after the production of polypropylene. Having analyzed the risks and the data for this particular project, the group decided to extend the production chain, which will be -- which will end with the production of not propylene, but polypropylene. These two projects are, therefore, aren't comparable. They are not on par to be compared, the previous one and the previous -- and then this current one. We are also developing our storage base and also the seaport Police -- the river port of Police. I would like to mention that quite expressly as Mr. [indiscernible] has publicly recently mentioned that this project has virtually nothing to do with the project that he promoted or so to speak, tried to promote or tried to launch.

The schedule that was adopted in 2016/'17 has been implemented consistently. There are no delays. A number of milestones have already been completed earlier, so the schedule -- so we are well ahead of the schedule. As we have defined certain risks beforehand in a more conservative way, so to speak. The project work progress is progressing as planned. There have been a number of concerns, which were voiced publicly are absolutely ungrounded as to the method of our equity construction or a structure and the entire financing structure. Therefore, I do believe that these concerns were absolutely ungrounded. Our project is progressing as planned based on the project finance model, and the assumptions related to the financing have been met.

There might be a certain problem with the number, the excessive number, of those parties who would like to participate in our equity. We estimated that number at around 800 -- PLN 880 million right now. This number or this figure is quite higher. We are currently looking at 3 entities involved and another one or the other 2 ones that either are analyzing the project or have declared their participation.

In April, we secured the consent from Grupa Azoty Police shareholders to carry out a public offering, subject to the existing shareholders' preemptive rights up to the amount of around PLN 1 billion to be earmarked and to be applied towards the completion of the PDH project. Letters of intent -- or an initial preliminary letter of intent signed with the Koreans with -- by PDH Polska and also with the governmental agency and with Hyundai Engineering turned into an agreement signed by Grupa Azoty S.A., Grupa Azoty Police and PDH Polska with the entities I have just mentioned. Right now, this work entered into a more detailed arrangement phase, and soon we're looking at signing of a specific, more detailed agreement concerning the launch of this project with -- to be completed with the Korean partners. We are talking about PLN 330 million. This has been declared, and we do believe that there are no grounds for any concerns as far as this capital involvement or engagement of those parties is concerned. We are also in touch with Lotus. Lotus is carrying out their analysis of the models, so that they can secure their own corporate decisions and approvals and finalize or deliver the letter of intent and their declaration of involvement, capital involvement at PLN 500 million. We are also waiting for the decisions of another project. We are talking about PLN 200 million. There is -- it is a major business partner acting -- or engaged in the operations of polypropylene. All in all, we are talking about PLN 1.7 billion, whereas we previously expected around PLN 800 million to PLN 900 million. This obviously has an impact on the structure of our financing for this project. The next stage was set primarily or preliminary -- preliminarily at -- on September. We do not see any threat to the delivery of that particular schedule. Last week, we had a major milestone. We signed an agreement with the general contractor namely Hyundai Engineering, and we launched work. Koreans are very much looking into the launch of that work. They have been preparing for the launch of that project. They have prepared themselves to launch the project. I'm talking about their own contracts. So Hyundai is well prepared and ready to start construction work on the construction site as soon as possible. We have also set the deadline for the launch of construction work in -- for first quarter of 2020. We might launch that work earlier. At the end of 2020, we will be looking at the completion of this project, and I do believe that this deadline will be met with no problems. In your materials, you have also information on certain competitive advantages and certain parameters of that project of Polimery Police. We are also talking about the logistics side and the technology that we have, that we have purchased. It will all enable us to move on to more complicated phases of that project for more advanced polypropylene formulas. This is not included in that preliminary project because we have -- as I mentioned, we have assumed certain conservative basis for this project. The effects of that project will include -- or key benefits of the project will include diversification of our revenue streams, additional profits, expansion of the project portfolio and flattening out of business cycles. One more thing I'd like to mention, this intention will be beneficial for all group companies, for Pulawy, for Kedzierzyn and also for Tarnów because it'll enable them to modernize -- or us to modernize the only unit that produces multi-compound fertilizers at Police. This production area has been quite neglected in certain respects. We are working on it to improve that situation. So we will reach certain modernization upgrades work at Police. We'll reach that stage. Without that particular production unit, there are -- there's no chance for the group to function successfully in the market because our competitive advantage lies primarily in our production portfolio, and the proportion in our production mix and production portfolio has changed. I am specifically referring to compound fertilizers. We'll stand greater chance to successfully sell and place on the market our products as a result.

This slide shows quite explicitly -- represents quite explicitly the major parameters of that project. We have mentioned the target market for that project for us. Of course, it is limited to Europe, to the Baltic Sea and also includes Turkey. We have discussed the project quite extensively during our annual performance conference. I would not like to repeat myself, but I would like to mention that in the first quarter, to our great satisfaction, 2 group companies, namely Grupa Azoty S.A. and also Grupa Azoty Police S.A. were awarded a title for the most transparent company of 2018. It was a third addition of that particular ranking announced by the Parkiet daily and also other partners and supported by the Warsaw Stock Exchange. This is a -- an important award because the winners were voted for. And thank you very much for -- to our investors who have voted for us, and it gives us a lot of satisfaction that our business and our -- the transparency of our activities are well recognized. We are doing our best to be quite open to our investors and present all the information that can be presented to them.

Our major figures are not and have not deviated from our estimates. The consolidated revenue came in at 3.3 -- more than PLN 3.3 billion. This is a major record-breaking figure for us. This is a highlight for us because it includes also the results delivered by Compo Expert. This is the highest figure in our history. For quarter 1 2019, we see -- we have seen a major improvement in consolidated EBITDA, which came in at PLN 608 million. Consolidated EBIT came in at PLN 408 million, and net profit came in at PLN 323 million. I will now give the floor over to Mr. Lapinski to discuss the performance of the entire group in more detail and also by individual companies, which will be presented later by other speakers.

[Pawel Lapinski, executive]

Ladies and gentlemen, as the CEO mentioned, when we look at quarter 1, our performance was record-breaking, which was, to a great extent, fueled and boosted by the performance of Compo Expert. But if we disregard the performance of Compo Expert, our performance would be -- would have been record-breaking as well.

Our revenue came in -- our revenue improved by around 3 -- PLN 900 million versus last year, and our EBITDA increased by 50% and came in at PLN 608 million.

Looking at our performance by segment and at our sales structure, we can see a major change. Traditional fertilizers represent 47%, which is the highest -- which was the lowest level ever because as we have declared earlier, we will be reducing that share gradually. Specialty fertilizers accounted for 15%, and the chemicals accounted for 22% and plastics accounted for 12%. Let me draw your attention to the fact that we generated, with the Fertilizers segment, generated the highest EBITDA ever.

Looking at our geographical structure, it also changed quite dramatically after the acquisition of Compo Expert. The share of the Polish market went down to 50% and previously it came -- it represented around 58%, 57% and the share of Compo Expert in Poland is only PLN 8 million in Poland, which is a great -- which has a great potential for improvement, and we have taken certain steps to enhance the position on the market share of Compo Expert in Poland. We will be -- we will use or -- and bend and tap all our business contacts to achieve that goal. As far as the European Union is concerned Compo Expert's share is higher than in the European Union, excluding Poland, than Grupa Azoty in terms of fertilizers. In all other areas, Grupa Azoty is the dominant -- has the dominant share. However, upon the acquisition of -- following the acquisition of Compo Expert, we improved our market share in other locations outside of Europe such as North America, South America and Asia.

Our EBITDA improved, which -- year-on-year, which was mainly due to higher volumes, sales volumes, and prices. Obviously, we had a negative effect of higher costs. I'm talking mainly about the prices of raw materials, potassium chloride, phosphate rock as well as coal and propylene. Gas, on the other hand, unlike previously, had a positive effect on our EBITDA. In addition, we had -- additionally, we had a positive contribution from Compo Expert.

Moving on to the Fertilizers segment, which dominated in quarter 1. I'd like to draw your attention to the change. Year-on-year, last year, the fertilizer business was in not a very good shape, mainly due to the situation in the gas market. We can still see certain volatility in the market. However, this time, the effects on the contribution of gas price is positive for us.

Our EBITDA came in at PLN 412 million. Our segment revenue came in more than PLN 2 billion. Our EBITDA went up quite considerably. We are monitoring closely our stock levels, both in Poland and in European Union. This level went down, which is a good sign, and it gives us room to sell more products, especially considering that we still are waiting for the next application of fertilizers at the turn of May and June. So the potential for the fertilizers to be used for certain crops is still there.

We are unfortunately looking at a certain slump in terms of our prices. However, we do hope that it will be -- the prices will be higher than last year, which will give us room for improvement later on considering the seasonality of our sales. We do not see any major threats at this point in that particular respect on the market. The market seems stable and quite optimistic, and the outlook is quite optimistic. Looking at our import sales, you can see that there is shortage of urea, but I do believe that we will -- and I do believe that we will take advantage of that particular gap. Obviously, there is a certain factor that has a major impact on our sales figures and the -- on our customers. I am specifically referring to weather. Our part of Europe, certainly Central and Eastern Europe, will, according to analysis, see good and grow quite high increases in sales and in crops. You can see that Poland, Germany, Italy, the U.K. and France are looking at quite an optimistic situation unlike Hungary, Spain and Romania. This is obviously related to the weather conditions, especially in Spain that has a very difficult situation because the weather conditions in Spain for the past 3 years is very bad, and there are no signs of improvement.

Let me go back to Compo Expert. In terms of the performance of the Fertilizers segment, segment revenue is just under PLN 500 million. EBITDA came in at PLN 45 million. This figure would've been different, however, we needed to spend certain costs and incur certain costs, first of all, related to the acquisition, the transaction itself because we needed certain spending on audits and other analysis. I am also talking about other costs related to the integration with Compo Expert. We are working to deliver synergies. This requires a lot of discussions, visits and support. This had a certain impact on our results, however, it will bear fruit in near future. And there is one other negative factor on Compo Expert's performance, a difficult situation in Argentina. There is devaluation of the local currency there and quite an inflation of around 40%. The situation is not stable in that particular market, however, we have taken certain steps, and we have already seen effects in the first quarter. I do believe that we will see an improved situation in the second quarter. The geographical structure of Compo Expert's business, 60% -- the European Union is 60%, and other Europe and other parts of the world is 40%. Both in fertilizers, and especially, specialty fertilizers, we saw that the volume -- sales volumes were growing. A couple of words about the Chemicals segment. The figure that -- the performance of our Chemicals segment is weaker, but this is well in line with the announcements that we have communicated to you. The revenue stays more or less flat. However, EBITDA of the Chemicals segment went down to PLN 102 million.

Let me discuss a number of major products. As far as melamine is concerned, the demand is quite stable. However, there are price pressures, mainly due to more -- higher -- better access to cheaper products from China or Russia. The same for titanium white, we have a price war with China and obviously has an impact on our performance both from melamine and titanium white. China is looking for the channel or the outlet for their cheaper products other -- in the markets other than the U.S. And therefore, it has an impact on our prices. In terms of OXO alcohols, especially DHT, market is stable. Plasticizers are growing, and production capacities of plasticizers is growing. In terms of plasticizers specifically, there are certain concerns I need to voice at this point because there is a new plant that was launched for plasticizers, and some of that production will be placed or will be sent to the European market.

In terms of plastics, our segment revenue stayed rather -- stayed quite flat at PLN 408 million. EBITDA went down by 10%, going down to PLN 55 million. Looking at our market outlook versus 2018, we did have certain concerns, and you have voiced your own concerns and doubts as to the Plastics segment and its performance. You can see that the weakening performance of the -- the performance is not as weak as we had expected. So the Plastics segment fares quite well in the markets, and EBITDA went down by only 10%, which is not a major drop. There are certain problems in terms of raw materials, especially of phenol -- for phenol and benzene. Phenol prices are quite high versus benzene prices, and this has an impact on our margins. And this situation might continue in the months to come. Obviously, this situation can be reversed as well. As you well -- are well aware, our strategy is based on building another part of that production chain, compounds, compound plastics. At Tarnow, we're building a unit for producing higher processed plastics. We will launch that unit at the end of the year and the production capacity will reach around 50% --50,000 tonnes. This should stabilize our margins in the long term, and we're also looking at PA 6. We are looking for certain opportunities to sell other products and the most popular products. We are working on foil polyamide in order to increase the sales of our products in that particular area. Major capital expenditure projects in 2019 are listed on this slide, Slide #19. At Pulawy -- this will be discussed later on, so maybe I will skip that particular slide and they will be discussed later by my colleagues.

Let me go back to investments. We were looking at the 2019 CapEx at PLN 1.3 billion, and our forecast is still the same. And this excludes capital expenditure on Polimery Police. A couple of words about our financing strength. Our net debt to EBITDA went up slightly. Especially, this was mainly due to the effect of International Financial Reporting Standard 16. Our limits stayed more or less the same. And net debt, let me remind you about our covenants in the agreements at 3 points, and this figure went up to 3.5. This the a maximum net debt-to-EBITDA covenant.

Let me now give the floor over to Mrs. Izabela Swiderek to discuss the performance of Grupa Azoty Pulawy.

[Izabela Swiderek, executive]

Ladies and gentlemen, the first quarter of 2019 for Grupa Azoty Pulawy saw very high revenue at the end of the quarter. This is the highest-ever performance excluding the year of 2015, and it came in at PLN 1.69 billion compared to the previous year and the previous -- and the first quarter of the previous year, it went up by 17% year-on-year. Our revenue in the first quarter was fueled mainly by the sales in the Agro segment at PLN 184 million. Our EBITDA and net profit figures went up as well. However, they were impacted by the costs, which had a positive effect in the first quarter, mainly in terms of prices of our strategic raw materials and feedstocks, especially the prices of gas. And the same for benzene, it also had a positive impact on our performance and especially, revenue. The positive impact was at 42%. However, on the other hand, we saw a slight increase in the prices of electrical energy and hard coal, which increased our selling costs, and the effect was at PLN 58 million. This has also impacted our EBITDA. Our EBITDA came in at -- all in all, came in at PLN 269 million, which is up -- which has doubled versus our previous figure reported for 2018.

Agro segment had a positive contribution on our EBITDA mainly based on the higher prices of our products. I'm talking about the cumulative effect of both product prices and higher sales volumes. The effect was PLN 53 million, where selling prices had a positive effect of PLN 105 million.

In terms of key EBITDA drivers, as I have just mentioned, sales volumes in the Agro segment, especially most of our projects or all of our projects virtually reported higher sales volumes, and the same goes for prices, mainly in terms of nitrogen-based fertilizers but also phosphorous fertilizers and compound fertilizers. The prices of all these projects were higher than before, than a year before. However, there were lower prices reported for the chemicals, especially melamine and caprolactam. They were sold at lower prices year-on-year, so the price decrease was reported, and the same goes for sales volumes, especially in terms of melamine. There was a positive effect of the prices of strategic raw materials, especially for gas, which contributed to our EBITDA, bringing around PLN 12 million and the same for benzene prices. However, this effect was offset to a certain extent by the negative effect of other prices of other raw materials. The prices of CO2 emission allowances fluctuated in quarter 1. On average, the price was up by 10% year-on-year. This also had an effect on our EBITDA figure. Going into more detail by segment. In the first quarter, in our Fertilizers segment, the situation was quite good. The Fertilizers segment revenue came in at nearly PLN 700 million, of which 87% or 82% was due to high sales of nitrogen fertilizers. The prices of most of our products, as I have mentioned before, were higher year-on-year. Let me just mention an example, an increase in liquid fertilizer prices ranged from 22% for UAN to more than 27% for other products. So this is a major positive change. For other products, the increase was lower but still was there. For instance, ammonia nitrate -- the price for ammonium nitrate went up by 16%. The same for phosphate fertilizers, it had -- they also had an impact on our EBITDA. In terms of the segment revenue as well, the increase in prices were lower but still came in at around 18%. For instance, in the case of certain products in the Fertilizers segment.

In terms of our geographical structure, fertilizers were mainly sold in foreign markets, and the share of exports versus last year went down slightly. However, if we look at the structure of our revenue, we will see that the Fertilizers segment came in or generated the majority of our revenue in that particular segment.

The Chemicals segment went down slightly in terms of the segment revenue, which came in at PLN 346 million with the breakdown for individual products. Melamine represents around 40% of our sales, more or less the same for caprolactam and 20% for urea.

In terms of geographical structure for our Chemicals segment, our export sales is at around 54% of our revenue, and it went down year-on-year by more than 5 percentage points. As we have mentioned before, our segment revenue for Chemicals was lower than a year before, which was due to lower sales volumes, mainly in terms of melamine, which had a major impact of PLN 7 million -- minus PLN 7 million in the first quarter of the year. And also, lower product prices had an impact, both in terms of melamine and caprolactam. Still our EBITDA for the Chemicals segment is higher than a year before, mainly owing to lower prices of our strategic raw materials.

In the first quarter of the year, we had a number of major events and highlights. I would like to only focus on 2, which are presented on this particular slide. The first one is the largest investment planned by Grupa Azoty Pulawy. The construction of a new generation unit -- energy generation unit. We accepted a preliminary bid in the tender procedure -- contract award procedure, and the bid was placed by a consortium of companies comprising of Polimex-Mostostal of Warszawa. We have analyzed that bid, which was more than PLN 1.1 billion, which means that it is necessarily for us to update our financing schedule for that particular project. But as far as the selection, the final selection -- or final decision is concerned, the final decision will be taken in the third quarter of this year, and the investment will take 36 months, and we will build a new coal-fired generation unit with a capacity of 100 megawatts of electricity and 300 megawatts of heat. The second highlight is related to another contract signed with LERG of Pustkowo as part of our partnership. The contract is around PLN 53 million, and it concerns the sales of melamine and urea. The contract will be implemented and delivered in stages in 2019 to 2021 -- in the period of 2019-2021. In addition to our major highlights, we are also working on a daily basis to implement other projects, investment projects. And in the first quarter, we spent nearly PLN 80 million, as you can see, the structure of our CapEx is related mainly to business growth and the business growth CapEx represents 60%, which means that we are mostly focused on building new installations and upgrading existing units in order to increase our efficiency -- improve our efficiency, increase certain parameters in order to meet legal requirements. The major CapEx projects include the upgrade of nitric acid units. This is an -- a project in progress. It will be -- the completion date is 2024. We have already spent more than PLN 18 million in quarter 1, and total cost today is more than PLN 100 million. Most of the spending is related to -- is accounted for by the parent company. However, at Grupa Azoty Pulawy as well, we are delivering our CapEx projects. As time goes by, our CapEx figures will be -- will increase during the year.

Thank you very much for your attention. I would like to mention that at the end -- that in the first quarter, both in the parent company and the subsidiaries of Grupa Azoty Pulawy group, we had no problems with our financial liquidity. There are no threats to our financial covenants and the payments outstanding to our customers. Still, net debt to EBITDA is negative, however, on the -- and on the safe side. The same goes for liquidity ratios. Thank you very much for attention. And now we'll move on to discussing the financial performance and the performance of Grupa Azoty Police.

I'll now give the floor over to Mr. Wlodzimierz Zasadzki.

[Wlodzimierz Zasadzki, executive]

Thank you very much. Before today's meeting, we were -- we received congratulations for our solid performance, and my response was only one word, the market. When the market fares negative -- when the market conditions are unfavorable, you need to minimize the negative effects of market problems as far as possible. We managed to achieve that goal last year. When the market fares well, you need to tap those opportunities, and I do believe we have because everything has its reasons. We do not operate in a void, so to speak. If the market is good, if the market situation is positive and advantageous, and I am specifically referring to the low price of gas, which is the lowest price that we have observed for years and years. However, we see an increase in prices in other raw materials such potassium chloride or phosphates, and these increases are major in terms of the price hikes. Still we need to face competition. We also need to face competition in the markets. So the competitive pressures have not diminished, it's still there. And there is still a situation which is difficult for us in terms of competitive pressures. However, we have established a strong sales muscle in the company. I'm talking about the sales department. We have a very consistent policy. We're able to offer a full palette, the full portfolio of products, and due to all those actions and measures that we have taking, we saw an improvement on our EBITDA and net profits as well as revenue. And I am talking about major increases of around 50%, so the main source of our revenue and net profit were sales of compound fertilizers, where the sales of compound fertilizers in general in the market, especially in Europe, we see that nitrogen fertilizers sales is going down and has been going down for certain time, which was due to the legislation imposed by the European Union.

We therefore are working on close cooperation and partnership with our partners, with our business partners, distributors. We saw an increase in sales by around 24% in the first quarter, which was due to higher sales of compound fertilizers. I will not discuss in more detail all those figures. You can analyze it for yourselves. However, neither urea nor ammonia contributed that much to our revenue in comparison with compound fertilizers. The same goes for the price war between the U.S. and China, which has already been mentioned by the CEO. China is trying and doing their best to locate or to send their products to Europe, and their quality of their product used to be much, much worse. However, right now, the quality of their product is quite comparable to other products in the European market. Obviously, they have more room to compete with -- in prices. And the prices they are offering is around 10% lower than the prices offered in the European Union and also in the U.S. Therefore, we have -- we need to prepare ourselves. We are preparing our position to be communicated to the European Union so that the European Union decides to increase the customs duties for titanium white specifically because there is a certain price dumping effect from China, and we need to counteract it. The conditions in titanium white markets had an effect, a negative effect on our revenue and a major decrease in our EBITDA, especially compared to last year than the first quarter of the last year, which was exceptional for titanium white figures. In terms of the major highlights and key developments at Grupa Azoty Police, we are preparing ourselves to the issue of new shares and the planned share capital increase to secure more funding for CapEx projects. On the one hand, it is due to the limitations in the covenants in the agreements with banks. As a group, we can -- our involvement is at PLN 1.3 billion, and the share capital increase will increase that figure. We will have more room to participate, to have a capital involvement and to tap certain benefits group-wide. There are certain issues that are difficult to discuss. Just an -- a piece of information for you, we are preparing -- we are in the process of testing a private investor. So in our prospectus, we will give you more detailed information. I would like to just mention that. And there are also certain technical and technological connections and links between Police and PDH, the project. We are preparing certain investments, key investments, for the PDH project. I am talking about the construction of an additional unit for the energy supply, electricity supply to Polimery Police. I am also talking about the supply of water, which is of key importance for the Polimery Police project and also hydrogen supply, purified -- almost nearly 100% pure hydrogen, which will be used by Police instead of natural gas, which means that we changed our CO2 emission figures. We reduced our emissions, and we will have less -- we will need to buy less or fewer CO2 emission allowances.

Obviously, hydrogen can be used for other purposes as well. We do not have the technology at that point, and we have certain problems with transports. There probably -- there are probably a lot of customers who would like to buy hydrogen. However, at that point, we do not -- our opportunities -- our potential in that particular area is limited. However, the installation will deliver 17,000 tonnes of hydrogen per year, which is quite high a figure. We also had certain investments in terms of logistics because Polimery Police, the unit, is located in the very heart of our facility, so certain logistics, investments needed -- were needed to make sure that both units function properly and efficiently and also noise reduction projects because there will be more noise with the new unit, after it is brought onstream, up and running. Therefore, we will need to spend certain money -- certain amount of money to reduce the noise levels in order to secure all our permits. So this investment is a key development, and I do believe that it will progress as planned with positive effects. I would like to mention and stress explicitly that we are ready to face any option in terms of the share issue. We're looking at the ramp placement as the third stage of that process. We are discussing certain options with 2 investors. So we -- rest assured, obviously, we're looking at the third, only the third stage of the issue, which might not really be necessary. But if it is, we will be ready to offer and place our new shares to specific investors with whom we are discussing the situation right now and consulting the options.

One more interesting thing I'd like to mention for Grupa Azoty Police was related to a visit by the Korean governmental representatives and also Hyundai representatives at Police. Koreans were quite surprised that Europe has no such investments and had no -- has had no investments so far. Polypropylene need to be imported to Europe, so Koreans were caught by surprise by it. And they have also emphasized that they treat this contract and also their capital involvement very seriously because they will be involved on the capital level with the governmental agency, so they treat this project as a certain window of opportunity for their European operations for their presence in Europe. And I do believe that there is -- there are other areas for our cooperation with Korean and not only Korean companies. Thank you very much. Moving on to discussing the performance of Grupa Azoty Kedzierzyn. Mr. Slawomir Lipkowski will present and discuss the performance of Kedzierzyn.

[Slawomir Lipkowski, executive]

Ladies and gentlemen, the first slide presents our revenue, which came in at PLN 529 million, which is a high level in comparison with a couple of previous years. For the producers of fertilizers and for Polish agriculture in general, the first quarter of this year was, in a way, untypical and nonstandard, and it will probably be so in the years to come as well because application season and fertilizer season started only on March 1. In previous years, we a saw different situation, when snow melted, farmers could use nitrogen fertilizers at that very point. This year, they only started their applications on March 1. In areas where we sell our products, the weather conditions were favorable. We will focus on the first quarter, not the second quarter, mind you. But for the regions of Opole, Lower Silesia and Western Europe -- oh, Western Poland, I'm sorry, these conditions were quite favorable, still The EBITDA figure at PLN 93 million was mainly due to the Fertilizers segment's contribution at Kedzierzyn. And if you compare that particular figure to previous years, we can see that this level changed, and the key drivers of our EBITDA were the prices of nitrogen fertilizers, not only Salmag, ZAKsan and other popular fertilizer products which we produce but also on other products, which I will discuss in more detail. I am talking about UAN, which is urea ammonium nitrate. It had -- we saw -- we sold a lot of that product and also the same applies for urea -- same applies to urea. Our revenue went down for other products due to lower sales volumes, specifically in the OXO segment. As far as fertilizers sales are concerned, the figures stayed more or less flat year-on-year.

Moving on to the discussion of performance by segment. Segment revenue for fertilizers went up by PLN 36 million, specifically by 19% for nitrogen fertilizers, and our RedNOx business is growing. It is related or connected to the fertilizers production line. The production unit is the same. However, those products are not used for agricultural purposes but for industrial purposes, which is related to the fact that we need to meet a lot of stringent requirements concerning protection of the natural environment. Our EBITDA came in at PLN 74 million in the first quarter of 2019 versus PLN 40 million year-on-year.

In terms of OXO alcohols segment, our revenue went down by 4%, which was due to limited access to products in the first quarter. However, as Mr. Lapinski has mentioned before, this market is mature, and in the first quarter, we saw balancing -- balanced situation. We saw certain surplus figures for the products in that particular segment, especially plasticizers and to 2-EH. In terms of significant development and highlights at Kedzierzyn in partnership with one of our distributors at Siemiatycze, we opened a storage base for UAN, urea ammonium nitrate. We are talking about liquid fertilizers there, and the capacity of that storage base is quite high, which means that we can load and send full trains to our customers with that products. As a result, we do not need to transport that particular product using trucks going on a very crowded -- using a very crowded highway. We are using railway transport to carry our -- to deliver our products to our customers.

Thank you very much. Thank you for your attention. Both you and webcast viewers will now have a chance to take part in investors chat, which is planned for the next Tuesday, May 28 at noon sharp. Next week, on Friday May 31 at noon again, we will present our Polimery projects at the Wall Street Conference. So I do invite you as well to take part in that presentation. I'd like to extend my heartfelt thanks to all of you who were with us, joined us online. Please stay in touch with us and with the developments across the Grupa Azoty Group, and I do hope that you will take part in the investors chat, next Tuesday, noon sharp. Thank you very much for your attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]