Grupa Azoty SA

WSE:ATT

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, ladies and gentlemen, and welcome to the earnings call of Azoty Capital Group. They will discuss the performance of Grupa Azoty Group for the fourth quarter and for 12 months of 2023 floors over to Mr. Adam Leszkiewicz, President of the Management Board of Grupa Azoty S.A.

[Adam Leszkiewicz, executive]

Thank you very much, and welcome to all of you, and I do hope that today's earnings call right before the long May weekend will be fruitful and effective and well first of all, allow us to present the financial performance of the group, but also clear some doubts in terms of certain events as well as answer some questions from investors, from the analysts. We are at your disposal today. And I'd like to take this opportunity to thank you all very much for your cooperation all year long in 2023, your involvement, your engagement, your comments on the company situation and group situation and analysis of certain events, this was of major help for us for Management Board of Azoty allowing us to build the answer reaction of the group in response to external internal events. We are a new composition of the management Board of Azoty we have just joined at the end of 2023. But I do hope that to a certain extent, we already managed to answer actually at the beginning of 2024. But I do hope that to a certain extent, we managed to answer your questions. And today, we will show you where we are right now. The whole entire -- the whole management board is such disposal Hubert Kamola responsible for Agro and chemicals as well as purchasing. [ Anikomosk ], CFO; and Andrzej Dawidowski responsible for logistics and plastics in polymer. Andrzej responsible for restructuring, Pawel Lapinski responsible for strategy investments. And also energy solution, we also have [indiscernible] new acting person of the Management Board of Polyolefin volume and this polymer. So for welcome again to all of you. Ladies and gentlemen, let me move on to the next slide. This presentation of the composition of the Management Board was meant to highlight the issue of competencies at the very beginning because we do believe that a number of turnarounds, those recovery processes are underway, but what we can show you on that it we're building the availability of wear the actions that we're taking against 2023. And this all boils down to people, the management. This is why we believe that is a company that are the key part of the turnaround plan because we are able quite quickly to present the market and analysts and investors that we are building a team that has the courage to tackle those very difficult problems that has competencies and that -- who's reliable to the state and to you. And we do hope and we do believe hardly that building this team based on the entire capital of the group that's product installations, headcount, human resources, we are able to recover liquidity and financial stability and in longer term, build growth prospects. The Management Board is always based on the selection of the management board. It's always based on competitive processes. What counts is the knowledge of Grupa is the competencies and the expertise. So as to make sure that we are able to work in the company in the group, work with the people work in the organization, not to waste time to get to know everything. But from the first day to work on recovery. This also applies to across the board actually interop. So first of all, we decided to combine the positions in the management Board management board across the team and the key companies and to make sure that the integration is as effective as possible and also in terms of communication to the knowledge of the standards and translation of the standards into a lower level. So cascading them down bottom up to make it faster. So this is why we decided to break down our areas of responsibility by people and the management board by members of the Management Board and the company. As far as 2023 is concerned, there were a couple of events that we need to highlight, and we discuss them in the comments to our financial performance and less of our business areas. But key facts and figures here to highlight at this point. So the drivers of our performance in 2023. The market was demanding by all means. But on the other hand, we saw certain stabilization of these prices, which allowed us not to increase our prices to our own prices too much. And the company should have had a more effective internal reply to the market. So we do believe that we -- what the company or the group lacked was a more end-to-end analysis of the situation versus what had been happening since the end of 2023, certain business decisions, for instance, related to the purchase of feedstocks. We're not optimum what we lack towards cost optimization also reflected in a certain and comprehensive document, such as a recovery or turnaround land. So it all affected our performance. And we have to look at the performance of Azoty Group over a long term because for years and years, we yielded we delivered stable EBITDA, stable profits, stable dividend we shared with the investors. However, in 2023, the situation was different. So we do believe that all these events, all these factors, both internal and external, should be looked upon as a one-off situation. We know that 2024 will be challenging, but we are trying and we're doing our best to put the group back on track in terms of how we analyze our business areas. We need to, first of all, remember about the shutdowns of individual installations, which did not happen before. Some of them were not [indiscernible] again. such as caprolactam or melamine at [indiscernible]. This is something we need to remember.Key investment programs, investment projects, Polimery Police does it work here is still in progress in terms of polimery police, especially we will discuss it later on. We want to close -- I mean, finish all those projects and bring them on stream while analyzing and considering other recommendations for target applications, for instance, the selection of target partners. We are still analyzing our costs. You know it because we are publishing the documents or updates on our cost-cutting efforts, such as sponsoring costs. We are also trying to do -- and we have been trying to cut costs across the board, and we will do our best to implement them on an ongoing basis based on the restructuring plan. Obviously, certain trends were seen before and Azoty Board could have reacted to them more quickly as the group knew even in spring 2023 that these events would happen. And unfortunately, it did not take any steps to optimize the cost structure. So their succession has become -- is becoming our main test, main task of the management board. All those new additional elements presented in the slide, as an additional comment to 2023. For instance, lack of progress and considerable progress in terms of consolidation of the group. We see it, especially servicing companies or servicing our services in general, [indiscernible] services, such as the management of human resources. You can see quite clearly that the involvement is not there in terms of the dedication and it's not employees, and it's not a problem of the employees per se, but the problem of the culture of the organizational culture where people were not encouraged to use their trigger, unleash their productivity. We want to do that. We want to unleash the creativity. We have problems with the image of the group because everything that happened in 2023 actually weakened the reliability undermines availability of Grupa Azoty across the markets. So we are doing our best to improve it, mainly through the improvement of our financial performance in the quarters to come. We see that we have weaker relations with the market, with the clients. We are meeting our partners. We are meeting a distribution network. We want to do that, and we will show them how to improve the situation, how to put it back on track. And this will obviously have a positive impact on our business. So we have a problem with social dialogue. We are identifying this phenomenon because we need to remember that there must be social dialogue, social acceptance for are very difficult restructuring efforts. Ever since March, we have been engaging in social dialogue on the situation, on the challenges and what we are going to do, and we have to together. And I see quite an understanding, and this is something that we will take care of -- we have a number of system efforts ahead of us. I'm talking about standardization of services organizational systems and services across group, this will obviously impact our business in a positive manner. So we have a number of goals or targets ahead of us in 2023 is a specific year because we're presenting the performance of right now. And we are putting an ownership for this performance to -- or on the previous management boards. But we, as a new management board, we need to find ourselves in this challenging situation and do our best improvement. So what we are -- what we have ahead of us is to implement the approved turnaround plan without even waiting for the final corporate acceptance. We have been taking some steps already. We want to have an agreement with financing institutions to have a space for us to think about how we develop our business, how to grow because every month, we have been updating these agreements with the financing editions. We want to build a target financial and business model for the group in order to show our efforts and our growth and the long-term perspective. I want to show you what the Grupa will look like in 3 years to come and later. What will the business look like? What would the stream of revenue look like? And this is the task for us for the weeks to come. We are also working on a catalog of growth projects and growth products related to our core business and our individual companies. We do not want to think of new mega major projects, investment projects. We want to focus on what we have right now and to develop it in terms of investing in what we need in order to enhance our supply chain in order to make sure that our installations, our assets are effective. For instance, in the energy segment. We want to look at it. We want to analyze it. We want to focus on the profitability. And based on that, we will take a decision in order to, for instance, suspend or disconnect or continue production. We will obviously look for new capital, bridge capital. For instance, we have no major investments to complete. I'm talking about polimery and we want to launch it commercially and love it. We also want to finish the CHP plant combining power plant, and we want to analyze its impact on the energy balance at [indiscernible]. This is our task as well. Integration is of major importance to us, especially in terms of business processes, and this is something that we need to focus and we will focus on. This is a major element for the improvement of the situation of the group as a whole. We will strengthen our business segments. We have been taking steps to do so. Kamola and Davidoski will talk about it in more detail. Obviously, sustainable growth in the entire ESG strategy is important to us, and you will see it in the materials that we have been publishing and the new management board will obviously focus on it as well, even more than before because ESG is important in itself, but also it is something that requires a lot of efforts in terms of, for instance, environmental protection, and we will do that. We are also preparing a [indiscernible] strategy as the first element of the strategy of 2023 for the entire group or 2030 for the entire group, and we'll do our best to strengthen competencies across the group in order to build the reliability of our group and the strength of our group. So the improvement and ongoing improvement of our competencies of the Management Board will be a flagship effort to show you at the beginning of 2024. We believe in this group. We have taken this difficult task on our shoulders. We are counting on your support. We will use your support. We'll tap into it, expressing our strong belief that we will try to put the group back on track, stabilizing its financial situation. and make it work again. So please do understand that our situation is challenging and difficult. And right now, we will present the financial performance for 2023. [indiscernible] will take over.

[Unknown Executive]

In the first quarter, we delivered the consolidated revenue from sales at PLN 84 million, EBITDA at minus PLN 10 million. It was still better up by 284 year-on-year. The impact of impairment losses on the nonfinancial noncurrent assets was at [indiscernible], some of them did not have an impact on EBITDA. However, the amount of PLN 137 million dropdown EBIT and EBITDA in the fourth quarter. These were the events that drove down our financial performance in the fourth quarter. But also, we received financial aid under the assistance for energy-intensive sectors program from the national fund for environmental protection and water management at PLN 173 million, which improved our performance in the third quarter. However, we also saw rising production volumes. This was an improvement in the Chemical segment and Agro segment. And even this slight drop by 2,000 in the Plastics segment was not even a considerable factor across the year. The performance was as follows: revenues from sale at 13 -- more than PLN 13 billion, down by 45% EBITDA at minus PLN 1.366 billion. It was not comparable to what we had 2022 production volumes quite differently than in the fourth quarter, we dropped significantly. We saw an effect of what happened -- what had happened in the first 3 quarters in terms of production volumes. The impact of one-off events from the fourth quarter that is impairment losses is similar. However we had certain events that improved our performance. We mentioned the 8 for energy-intensive factors we received PLN 234 million in the first quarter under that program, and we also sold CO2 emission allowances that we had purchased before. So it improved our performance by PLN 280 million. Moving on to our market situation, in terms of the prospects for 2020, obviously, the macro environment was not favorable this was not based on positive impact, especially in the construction market that use our products, especially in terms of OXO alcohols, titanium white or melamine. We saw a major slowdown in the agro market in 2023. So major problems in terms of the financing of the inventory. So this is why our strategy in terms of purchasing and the risk management changed especially in terms of the distributor intermediary as well as the end user that is the grower. The falling prices of grains, for instance, [indiscernible] extension Paris and Chicago, obviously, undermines the purchasing power as well. So as a result, 2023 as a whole saw these challenges. Grupa Azoty did not adjust its decision-making model and the business model to those trends and those changes in the market, imports of fertilizers from a number of directions from all around the world, obviously, made it even worse throughout 2023. Most fertilizer plants and chemical plants in 2023 also in Europe have more optimized in terms of the capacity utilization, which was not more than 80%. And if we look at our figures numbers on the consumption of gas. And if you compare 2023 and 2022, we saw -- we could see a drop of 15.2 terawatt hour. That means a drop of 6% versus 2021. The price of gas obviously dropped significantly from the peaks that we saw in 2022. However, we still see a price that is double the price of the period from -- before the war that is 2017, 2019. Obviously, we have to remember there about the prices as well as the exchange rates, which have a major impact on, for instance, the developer business, the construction business and the purchasing of residential units. And we have to remember that it has an impact on the Chemical segment in the Plastics segment of Grupa Azoty. In terms of CO2 allowances and the cost of CO2 allowances, we did not see any significant drops and changes in terms of currency exchange, the strengthening of PLN is not a good sign for us from the perspective of export because we have a positive exposure here as well as on the import side because we have to remember about the directions of supply from our -- to our home markets. We had an analysis, a change of [indiscernible] for euro. For instance, we're talking the price of ammonium nitrate. We are talking about close to PLN 7 per tonne of our product. And we are talking about a difference of PLN 3 million plus or minus for Grupa Azoty, which is of major importance to us. In terms of CO2 emission allowances, they saw downwards change, stable change. But we have a security model or a hedging model in terms of CO2 emission allowances. And so we are analyzing and verifying our demand for the year to come. In terms of revenue for the fourth quarter, we had a downward trend by more than PLN 2 million, especially in terms of -- or due to a drop in product prices by PLN 2.3 billion. We need to remember about a drop in the cost of feedstocks at more than PLN 1.8 billion, especially due to changes in gas prices. In 2023, we did not have any production of caprolactam, so a major cost of benzene was eliminated. However, all other feedstock costs for propylene final reported a drop of, for instance, 30%. In terms of our Agro segment in 2023, we saw major pressures for and our end users that are the growers or farmers mainly due to the inflow of cheaper grain from Ukraine and a surplus of that product, which we still have to tackle as we speak and also the expansion of other exporters of grain, which put a lot of pressure at the prices at Paris and Paris Exchange .On a positive note, in 2023, according to the information from the agency of restructuring and modernization of go culture, we saw an over PLN 10 billion of direct payments to our growers. So the purchasing activity picked up at the beginning of July, mainly due to favorable weather and the seasonal effects after June, it usually happens across the markets. In terms of compound fertilizers in quarter four, we saw a slight increase to percent. However, if you compare it to the comparative period of the previous year, the prices were lower by 20% or 32%, its worth commenting on import streams. This is very important to us in terms of our competitiveness. The imports of urea remains strong from all the different directions, including from Russia. Import from compound fertilizers did not exceed 250,000, which can be considered moderate. However, we need to remember about ammonium nitrate and which [indiscernible] for example. So the sources of ammonium nitrate coming to Poland were both EU and EU member states and also United Kingdom. So something when we're wrong here in terms of our reaction of those competitors. As a summary, in terms of Agro segment, we need to remember about the lower prices of gas, considerably lower volumes, production volumes across the year and the purchasing policy on demand, nobody generated any inventory whatsoever, which is a major model in the chemicals business and obviously, strong impact of imports and effect on supply. In terms of our Chemicals segment, OXO alcohols in 2023. The prices of oxo-alcohols across the board went down by about 25%, 27% lower in terms of melamine, lower utilization of our production capacities. We had certain problems in terms of production facilities, especially cost of production as well. We are analyzing the situation in terms of how to address our offering, our portfolio of products and also our competitiveness in the years, I mean in the months to come. Become as a summary for the Chemicals segment. In the analyzing period quarter four, the demand was weak, sluggish, due to unfavorable macroeconomic conditions, lack of certain trends in terms of prices. Prices actually stayed flat. And we have to remember that there were also low prices across the European markets also due to imports. The Plastics segment was under pressure of polyamide 6 prices downward trends, combined with rising prices of benzene. So this spread for 2021, 2022 compared to 2021, 2022 was very different, especially in terms of European markets, which affect our business. We also saw a downward trend in prices towards caprolactam. And we also did not manage to produce caprolactam at [indiscernible] was shut down. And actually, it was not restarted as we speak. As a consequence, we have lower production capacities in terms of polyamide-6. Some of the production capacities are not utilized. We see a potential to improve and increase production volumes in the periods to come. But right now, this cannot be confirmed by the market. It's going to be done versus the macro situation if those market trends remain. There was a drop in the prices by 23% combined with an increase in benzene prices by 19% over the long term ever since the beginning of 2023, this has an impact on our business all around Europe actually. As a whole in terms of the summary of the plastics, the market, the key in Europe was the macro situation. The demand in Europe was sluggish. And also, we saw a slowdown of production in the automotive or construction segment that they are our main segments for our products. Therefore, the demand in the Plastics segment is much lower. It did stabilize. However, it stabilized at a level that is still very much lower than before the pandemic, which will impact our production capacities and efficiency of the market also across the board in Europe, including at our competitors. The reversal of the trend, the downward trend in prices was mainly due to an increase in the prices of benzene. We do not see any upward trends in demand, however. Our performance by segment. In the fourth quarter, we saw a drop in the revenues across the group by PLN 2 billion, mainly in the Agro segment by PLN 1.2 billion in the Chemical segment by PLN 663 million plastics, down by PLN 86 million. In the fourth quarter, in the Agro segment and the Chemicals segment reported a pickup year-on-year in terms of EBITDA, up by PLN 280 million and PLN 60 million. The Plastics segment EBITDA in the Plastics segment went down mainly due to [indiscernible] polyolefins performance due to the startup of installation. Across the year 2023, we saw a drop in revenue by PLN 11 billion to PLN 113 million, including MXN 6.8 million for the Agro segment, PLN 3.8 billion for the Chemical segment and more than PLN 900 million for [indiscernible] segment. The contribution of the Agro segment is significant. 61% of the entire revenue structure, both in 2022 and in 2023 and the negative margins across all the segments, unlimited demand for our products and unfavorable price relations versus our cost of production. In the Agro segment, in the fourth quarter of 2023, the average price of gas, our main feedstock was at PLN 31 per megawatt hour. TTF, down by 57% year-on-year. At the same time, in the fourth quarter, the price of gas went up by 20% quarter-on-quarter even though we saw a significant downward trend in the months to come the price range from PLN 28 to PLN 53 per megawatt hour. The continuing downward trend for the prices of grain got in both Poland and in Europe and growers also saw a downward trend in the price of gas, which made them weight for a reduction of fertilizer prices. Obviously, we need to remember about the stock levels, applications and purchases of fertilizers before the final application season. In the Chemicals segment, in the fourth quarter of 2023, we saw low demand due to an unfavorable macro situation around the world, especially the lack of revival in China. The stock levels of our clients in the segment were quite high, which was mainly due to the supply of competitive projects imported from Asia. The sale of products by volume went down versus the previous year, year-on-year, but the sales of melamine, urea, titanium white in terms of volumes, they went up. And we also remember about the technical grade urea and [indiscernible]. In terms of plastics in the fourth quarter, price trends went down in terms of PA6 and [indiscernible] year-on-year. The key sectors that consume polyamide accepted lower volumes in terms of prices due to changing demand from end users and unfavorable macro conditions. A slight improvement were seen in the automotive segment, but those levels were still lower than before the pandemic due to a very difficult situation in terms of demand and supply balance in the March last year. We stopped caprolactam production at [indiscernible], and it was not resumed by the end of the year. In the fourth quarter of 2023. In the Plastics segment, we saw an emerging EBITDA margin at minus 80%, which was determined mainly by the impact of high start-up costs at Grupa Azoty Polyolefins. Moving on to our financial performance, key facts and figures -- we are paying off our long-term and short-term debt. We're talking about PLN 386 million and the tranche of term loan with a bank consumption as well as the loans from EBI and European banker Construction Development. In 2023, we increased the payout of the revolving facility. We're talking about PLN 1.1 billion of the entire pool of PLN 1.5 billion available until 2025. We also have multipurpose credit limits with PKO up to PLN 1 billion until 2025, 30 September, which was related to the cash pooling agreement, real cash pooling in euro and PLM. And so again, September 30, 2025. Please note the financial situation in 2023, it went down, it deteriorated due to extreme volatility of gas prices as well as products, including fertilizers and a major effect on the demand to our products. This obviously had an impact of our -- on our financial performance, which translated into a low net debt to EBITDA in 2020. In 2021, 2022 versus 2021, 2020, we're talking about minus PLN 2.7 million due to the negative EBITDA and the resulting net debt increase the negative performance in the quarters to come started a discussion and analysis with a group of banks financing both the group and polyolefins the current management board got involved into this process at the end of March, the intensive negotiations with the group of banks. In terms of our CapEx investments in the third quarter of the year, they stood at PLN 531 million and more than PLN 2 billion, specifically PLN 2.2 billion across the year. Polimery Police a project will be discussed by [indiscernible].2023 was the key year for the project, mainly due to the fact that the production was launched in June as gas production. In order to secure the permits, we obviously applied to the under the rich process to use propane and propylene under the production process. We only have 0.1% to complete the investment. Right now, the plant produces around 800 tonnes of propylene. As we speak, the products are sold on the market, mainly in Europe, specifically in Poland, Germany, the Baltic states, as well as in the Southern Europe. Through our distribution channels and traders, some of it also through our own distribution channels. In terms of the supply of feedstocks, we received or accepted 8 propane and 2 propylene shipments by sea, the process is approved and it proceeds as planned. Other key investments, CapEx projects are presented on this slide. So you are very much encouraged to analyze the presentation to find out more. What we want to add at this point is that the new management for the current Management Board confirms you're conscious decisions and our ownership of the decisions that we make in the chemicals business. Sustainability is treated as a key strategic goal for us across the group, across all companies of the group. We have selected specific management more members who will be owners of that process, and we also published nonfinancial performance report for 2023 or [indiscernible] report, including the data for all the key companies and we also disclose more than 80 GR standards in the report and our own goals in terms of ESG.As a summary of our performance, both in the fourth quarter and in 2023 as a whole. Do we want to add that in the fourth quarter, alone despite the negative EBITDA for the entire group. Most of the companies of the group delivered reported a positive EBITDA, but the impact of impairment losses. At the parent company is seen at the net profit level. In other companies, it's only at [indiscernible] that reported the net profit above the line that is more than that across -- in the quarter. In the fourth quarter across the board. You can see what the situation looks like in the entire year. You see losses, PLN 1.6 billion [indiscernible] or the PLN 600 million and the same at [indiscernible] and [indiscernible].At Compo Expert, despite the positive EBITDA across the year, we're talking about PLN 317 million in terms of a net loss at the end of the year at PLN 68 million.In terms of Grupa Azoty, a couple of fixed figures, limited the production in 2023 was the main element in which we responded to the market situation in terms of the demand. our flagship products and our flagship installations were not used as they could be. In terms of natural fertilizers, we're talking about a downward trend by 8%. You should also look at the decision to reduce the production in the first half of 2023 was due to high contracted gas prices for the first half of the year. We have to remember that the stocks were bought at high prices. This is something that put pressure on the company. On the other hand, we also reduced our CapEx spending and investments, but on the other hand, we got involved in a very intensive sponsorship activities. We also generated certain-- we also saw certain delays on our key investments. I will talk about it later on. In the consolidated revenue for the fourth quarter, we're talking about more than PLN 1 billion, going down by nearly 50% year-on-year, which was mainly due to lower prices of our products and sales we had a positive impact on the volumes, PLN 156 million. In the fourth quarter, we also received financial from the National Fund of the environmental protection and water management. And this added to our positive financial performance and also EBITDA, which we delivered at 14.3%. In terms of the cost of energy, we're talking about 5% mainly due to the rising prices of electricity, which translated into PLN 46 million, combined with lower volumes of utilized or consumed energy. The cost of coal in up. The prices went up by 36%, and this is a problem that we need to tackle still. Over the year, our revenue from sales went down by nearly PLN 4.5 billion due to lower prices and also lower volumes. As you can see on the slide, we reported higher cost of electricity, up by 59%, which was due to the rising prices of electricity across the year by 180%, combined with lower consumption by 21% down by 21% as well as the consumption of coal, mainly due to the rising prices of coal going up by 80%. We're talking about PLN 120 million. To believe that despite the additional funds received for energy-intensive sectors due to abrupt prices of electricity and gas and also the sales of CO2 emission allowances. At the level of EBITDA, EBIT and net profit, we're still talking about negative results. We're talking about minus over minus PLN 60 million in terms of our net loss. In the commentary by segment, the key segments, that is Agro and Plastics generated negative EBITDA at PLN 519 million. And in the case of Agro segment, the revenue accounted for 80% of our revenue structure. That is a lot. And obviously, significantly lower volumes and the prices of key fertilizer products were the reason for that. And we also mentioned [indiscernible] mentioned the stopover of the [indiscernible] at election. We are seeing an increase in demand in the Agro segment, in terms of fertilizer products, obviously, it was still down year-on-year. For instance, for urea, we're talking about 28% of the difference, which is a lot -- the last comment on our investments because it's very important for the company investments. The 4 investment projects that we are presenting on this slide in terms of the upgrade of our boiler OP to 115. It's really finished. It's practically finished. In terms of flue gas [indiscernible], same at 85% we will have a launch this installation in terms of the test run, and we will see what the energy structure at [indiscernible] will look like because we have to remember about the step over of the caprolactam unit, which means that the energy block that I'm talking about right now, it might not be utilized. We're talking about the construction of the energy block based on coal, which is at 99%. In terms of the upgrade of the asset unit and the building of new nitric acid installations. We're talking about 78% in terms of progress. The budget is at PLN 695 million and this is a key investment for the company because without it, our lines will not be able to produce products and run smoothly without the upgrade of the nitric acid unit. This is, therefore, a key investment, and it needs to be finalized as soon as possible. Moving on to [indiscernible] the situation in the fertilizer market is very enviable in terms of the prices falling very quickly in terms of prices. We also need to remember a very sluggish slow decision making process in the company, which did not keep up with the demand in the market for new products. So the dynamics of the market was way ahead of that decision process. In terms of titanium white, the availability of imported titanium wide was very, very high. And this combined with lower demand in general. Affected both the Polish and the European markets and combined with lower prices. Obviously, our performance was also impacted by the update of the financial model for the for Grupa Azoty poly elephants as well as an impairment test for the assets of this company. The additional support for energy-intensive sectors, we're talking about PLN 109 million of an impact on our EBIT, on the other hand, we will -- we also had the impact of the sale of 457,000 CO2 emission allowances in the period, which also had a positive impact of our performance. We also signed an agreement with the financing institutions together with the agreement to waive certain conditions of the financing agreement. Looking at the prospects of the company, we joined the Hydrogen Academy as we joined a venture of the corporation partnership with the University of the policy province in setting. In terms of fertilizer production, fourth quarter was way better than the first 3 quarters of the year, we reported a positive EBITDA at PLN 25 million and 3.6% in terms of positive EBITDA margin. Our operations in the fourth quarter were improved, especially in terms of compound fertilizer production. We're talking about a larger demand from the local market in Poland, but also the reduction of production costs due to lower gas positions sold in phosphate prices. In terms of the additional impact on our financial performance, we received the support for energy-intensive sectors from the National Fund. And we're talking about PLN 36 million. However, this was offset in terms of EBITDA level. This was offset by impairment losses of assets at PLN 148 million. We will now the impact on our gross profit included the upgrade or update actually of the financing model for Grupa Azoty. In 2023, we closed the year at a negative EBITDA level of minus PLN 77 million and minus 2.6% in terms of EBITDA margin. As I said before, the aspect off quicker down trend in prices of course of those products versus compound fertilizer prices added to our situation here. And also, we saw a downward trend in production volumes, which all translated into our lower performance. In titanium white, we saw both downward trends in prices and production volumes sale of CO2 emission allowances PLN 190 million was a positive factor. And also, as I said, the 2 intensive, energy-intensive sectors, which were received. Regarding pigments the performance for the fourth quarter of 2023, we're talking about minus PLN 12 million in fertilizers. It's on the plus PLN 32 million. The main drivers of those figures are the stabilization of gas prices as well as the prices of potassium chloride and phosphates. The drop in those prices allowed the company in the fourth quarter to report a positive EBITDA in the fertilizer segment. Considering the more sluggish demand, the production was not on par with the previous years. However, it was adjusted to the expectations of the market, especially considering the purchasing power of the farmers. In 2023 quarter four, EBITDA margin went up year-on-year at 5.7% in the fertilizer segment. Looking at the pigment segment, we saw aero demand for titanium white and the product derived from titanium white, mainly, it affected the construction segment. We also saw the pressure for price reduction for titanium white in the market. This was obviously supported by the global oversupply of titanium white, especially from Asia. In the other segments, the other activity. EBITDA was reported at PLN 5 million. Our contribution by segment in 2023 as a whole, just EBITDA. In the fertilizer segment, EBITDA was reported at minus PLN 13 million in the pigment segment at minus PLN 60 million and volumes went down by 18% and other activities, the EBITDA is positive at PLN 86 million. In terms of production volumes and sales volumes. As you can see in the fourth quarter, we saw an increase year-on-year and to date, we are talking about a downward trend, both for fertilizers and for other segments. Investments are investments for both containing white production. We are talking about our extension of the logistics space and also the expansion of the storage and distribution system for TiO2, titanium white. -- automatic control for 2 installations for the production of ammonia and the upgrade of a turbine generation unit together with auxiliary installations. These are continue to be continued into 2024. As a summary of our CapEx spending and investments in 2023, fourth quarter. We're showing a decline of 55% versus 2020. We mainly focused on the upgrades to repairs as well as mandatory investments throughout 2023. Our investments went down by 45%, and the key areas were in maintenance and repairs as well as mandatory CapEx and minatory investments. Thank you very much for your attention.Thank you very much, and we are now ready to move on to the Q&A session.

[Unknown Analyst]

Question number one. Are you considering the issue of stocks as the Management Board in order to prove the financial situation of the group.

[Unknown Executive]

Well, we are taking into consideration all the options, and this includes the issue of shares.

[Unknown Analyst]

Do you plan to delist [ Pava ] and [indiscernible]?

[Unknown Executive]

There are no plans to the list either of these companies as we speak. All options are on the table, as we said, but there are no specific plans for that.

[Unknown Analyst]

How much do you still have to spend on polymer in terms of group?

[Unknown Executive]

In terms of the project, we're talking about EUR 133 million to settle under the project, and we do not see any other scenario here to be talking about. This is under no discussion here.

[Unknown Analyst]

One more question. to put your employees at ease, what are your plans for the restructuring of head count. There has been a lot of signals and talks about the downsizing. We're talking about a standstill in terms of the salaries as well? There's no inflation increases for salaries and especially considering a lower competitive of the group as an employer. What are your plans to retain a well-educated and expert personnel within the group?

[Unknown Executive]

I do believe that this question is the most difficult question. We have received from you together, but also during our previous sessions with the media. This is a very difficult topic because the key assets for the group are the employees. And we are definitely communicating it very clearly. The main assets are the employees, their competencies at various positions in various installations and plans. And we want to invest in human resources as one of the key elements of our business pillars us. Unfortunately, what we see for 2023, and it starts earlier, has an impact on not only our financial liquidity, the stability of the group, but also you have to remember about everything that is associated with the problems that we have to disclose, but also the fact that no action has been taken before, while focusing on this flagship investment in terms of its size and importance that is [indiscernible].There were 2 areas that we, as a new management board see as very challenging in terms of its impact on the group. First of all, the headcount, the employees the human resources and no investment into human capital; and secondly, on the installations and the lag of the assignment of additional sufficient spans on the repairs, on the maintenance, on the upgrade of those installations. So we will analyze it in detail. We want to come back to the practical hands-on idea that is investment in human capital obviously, retention of key employees and key competencies and attempt at a certain agreement with the social side to make sure that both us as the group and the employee is satisfied or are satisfied because at the end of the day, the idea is to grow the business and improve our business situation and without the employees, it won't be possible. I cannot promise you that we can restore the level of investments in [indiscernible] capital that will be satisfactory to you very quickly. We saw a lot of actions taken in quite the opposite direction. So first of all, the ban on competition to make sure that key management level -- we had this, but we will not look at it in the very same way. We'll discuss it with the trade unions, and we will communicate directly with the companies and with the employees in order to make sure that we'll have investments into human capital. We will restore it. In 2024, it will be difficult. So we will have to ask you for some patience. But the idea is to return to that level, the level of investment into human resources, human capital, the level that will be satisfactory and beneficial to all of you. And group as a whole. There were some couple of questions that you are repeating. The impact of sales of CO2 emission allowances of EBITDA, we're talking about PLN 288 million, and the sales took the late in the first half quarter actually 2023. Thank you very much for your attention. And let us now move on to individual discussions -- or maybe do we have any questions from the room in the room from our participants. If not thank you very much for your attention. Thank you very much for today's conference call. And I would like you to the investors chat with [indiscernible], the CFO at 2 p.m. on the stock watch. Thank you very much for your attention.