Press releases

Notwithstanding very difficult macroeconomic conditions and the economic slowdown observed in the first quarter of 2009, the Ciech Chemical Group reported good financial results. The net profit amounted to PLN 33 million, and revenues exceeded PLN 971 million.

After the sudden economic downturn at the end of the preceding year, declining trends during the first months of 2009 year in the global economy were observed. Further slow down in the industrial production, weak economic downturn in branches of key importance for the company and limitations of access to financing created the unfavourable business environment. Under the said difficult conditions, the Ciech Group succeeded in achieving good, stable financial results. – Restoration of our company began in the first quarter after a downturn in the market during the last months of 2008. – says Ryszard Kunicki, president of Ciech SA. – I am convinced that the worst has passed. First signs of economic boom are noticeable – he adds.

First signs of restoration after the markets collapse

As the Management Board expected, during the first months of this year the Soda Division that was a leading segment of the Group generated 42 percent of revenues. It was possible to maintain good profitability despite development of a competitive market concerning import of products from China and the United States of America and perceptible drop in sales of soda ash. The high level of demand for baking soda and salt, and drop in raw materials and fuels prices are favourable for positive financial results of the Soda Division. It is easy to observe first signs of improvement of the organic segment; demand for TDI maintains at stable level, and on Asia markets prices of this product began growing slowly. A growth of demand for multi-components fertilizers is noticeable as well. Weakening of the zloty influenced positively the Group’s operating results, however, a negative result of option transactions decreased significance of the conducive exchange rate. 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 negative influence on the company’s financial result was reduced by hedge accounting introduced in October. Transactions involving currency options do not pose any threat to the company operations. Net loss per currency options for the first quarter of 2009 amounted to PLN 42,8 million.

Debt will be lower

Intensive performance of the investment programme and weakening of the zloty during the first months of this year contributed to the substantial debt of the Group. During the next quarters relative and irrelative debt level of the Ciech Group will be subject to reducing because of restrictions concerning involvement in the working capital, and disinvestment of areas outside the basic operations. The Company is negotiating with banks the conditions of debt service. At the same time, Ciech received preliminary tenders and tried to develop with banks the way of stable financing of current operations and future development of the Group. It is estimated that the final financing conditions will be specified by the end of the second quarter, and the financing will began by the third quarter of this year. The Ciech Group manages actively the companies’ liquidity it comprises. Despite large investment outlays, the settlement of option contracts and restricted access to new financing sources, financial liquidity is retained.

Agreement as a key to gain control over and sale caverns

The agreement concluded with a minority shareholder of German soda companies Jochen Ohm on 18 February 2009 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 Soda Deutschland Ciech (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. On 5 May 2009, Sodawerk Stassfurt, a company belonging to Ciech in 100%, made an agreement concerning caverns with RWE Gasspeicher GmbH, a subsidiary of RWE AG. The agreement concerns the mining law associated with part of the mining land of Stassfurter Salzsattel I and neighbouring properties. Also it covers preparations of four caverns located there to store gas. The agreement will come into force if a consent from the local Mining Office based on the German Federal Mining Act is obtained, which is only a pure formality. The total agreement value will exceed EUR 60 million by the year of 2019. The Ciech Group will receive almost half of this amount by the end of this year. Two more caverns are to be sold, for which RWE has already gained a pre-emption right.