Press releases

Financial results of the Ciech Chemical Group for 2008 are similar to the forecast ones in spite of very difficult macroeconomic conditions observed during last months of the previous year. The net profit increased up to PLN 80 million. Sales revenues went up by 11% up to about PLN 3,8 billion (a thousand million) as compared to revenues generated in 2007.

The collapse of economic conditions in the industry and crisis on financial markets observed in the fourth quarter brought about very disadvantageous operations for the whole chemical branch. Despite unfavorable external factors, Ciech preserved business stability and positively distinguished itself in comparison with other chemical companies.
- During economic downturn of last months, we succeeded in achieving the projected level of financial results and maintaining the company’s operating position – says Ryszard Kunicki, president of Ciech SA. – The achievement of these results required a strong effort of the management and personnel, verification of plans, many analyses and sacrifices. We consider fulfillment of our plans as our modest success – he adds.

Integration and repair programme produce results

The Ciech Group could take advantage of a privileged situation on the soda market resulting from the Soda Division’s operating integration and increase in the capacity of Romanian soda companies. Per annum, the sale of calcined soda, one of the most important products of the Group, increased by 36%, with a simultaneous price increase and big demand. The Soda Division’s positive contribution allowed to minimize results of the collapse of economic conditions at the end of the year as regards organic and agro segments. Finally after four quarters of 2008 the Ciech Group’s sales revenues amounted to PLN 3 792 million, and the consolidated net profit exceeded PLN 79,97 million. The operating profit increased up to PLN 267 million.
- Financial results for 2008 could be better than the ones we expected, if not a negative influence of option transactions conducted within the previous periods – says president Kunicki.
Ciech as the first one among stock exchange listed companies informed the market reliably about a negative influence of last year’s transactions involving currency options on the Group's results. A new Management Board estimated the scale of the problem appropriately and verified the forecast about the net profit for 2008. The updated plans provided for the achievement of such level of sales revenues as it was forecast in February 2008, i.e. PLN 4,27 billion (a thousand million). Taking a negative influence of the option into account, the forecast about the net profit was lowered from PLN 225 million by PLN 137 million. A negative influence on the company’s financial result was reduced by hedge accounting introduced in October. Analyses carried out by the company show that transactions involving currency options do not pose any threat to the company operations. Net loss per currency options for 2008 amounted to PLN 186,2 million, however, cash settlement of active options amounted only to PLN 4,7 million.

Settlement of the purchase of German soda companies

Having concluded an agreement on 18 February 2009 with a minority shareholder of German soda companies Jochen Ohm, Ciech completed the assets valuation of Soda Deutschland Ciech (SDC). At the same time, based on the annual test of values of the German company’s individual fixed assets it was found necessary to deduct the company’s valuation and fixed assets in the total amount of about EUR 90 million. The financial result of 2007 was burdened with this deduction, and it lowered from PLN 242 million to PLN -30 million.
- This is only an accounting operation and does not influence the Ciech Group’s cash flows. It shall not have any influence on the company’s evaluation either – says Robert Bednarski, member of the management board responsible for the Group’s finances.
The agreement concluded with Jochen Ohme allowed Ciech to gain a full operational control over German companies, to reduce obligations toward the minority shareholder by over half, and to acquire 8% of the shares of the German company SDC. At the same time, taking over a full control made it possible to begin the reduction of current costs of companies operations and to secure full rights to derive benefits from current and future cavern projects. The expense associated with this agreement amounts to EUR 12,5 million.

Good prospects for 2009

This year will be the key one for the company’s future towards the process of chemical sector privatization and consolidation. In such a situation the most important tasks of the Ciech Chemical Group for 2009 are: further improvement in operating efficiency, reduction of costs and strengthening of the integration. Ciech shall attempt to maintain a high level of the export sale, which is especially profitable in case of the euro and dollar to the zlotys high exchange. Restructuring of the Group, for example, by the sale of assets not belonging to the main area of the company’s activities, is continued as well.
- Previous forecasts occurred to be rational. Thus we are expecting that this year's financial results shall be better that the ones we achieved in 2008 as regards both revenues and net profit – says Ryszard Kunicki, president of Ciech.
The market analysis updated straight away shows that the stable soda market, improvement in economic conditions on the fertilizers market and increase in the organic products sale volumes with lower margins should favour the Group development.