Grupa Azoty Aktie

Good morning, everyone, and welcome to the earnings call, which will be devoted to the discussion of financial performance of Grupa Azoty for the first quarter 2026. As usual, we have an online webcast and also after the presentation, we will have a Q&A session. [Operator Instructions] The results and the outlook for the upcoming quarters will be discussed by Marcin Celejewski, President of Management Board and Jacek Podgorski, Vice President of the Management Board of Grupa Azoty.

Good morning, everyone. First quarter of 2026, was obviously a period where we -- when we were impacted by what happened in the Persian Gulf and the outbreak of the conflict and blockage of the Hormuz strait. It is a seemingly distant destination or location from the perspective of our core business and also the global business related to the processing of petrochemical products. It actually escalated and had significant implications for our basic core products that are fertilizers. The situation was dynamic.

Right now, we are facing unprecedented events such as introduction of export duties both on fertilizers and also various semi products used in the fertilizer production, for instance, Egypt introduced export duties at $90 per tonne for any nitrogen-based fertilizers. As far as China is concerned, which is usually very restrictive, they have further tightened the export on nitrogen and phosphorus fertilizers in order to secure and safeguard their domestic market.

Russians introduced a temporary ban on ammonium nitrate export, extended by the end of June also the ban on sulfur exports. Turkey introduced a further ban on urea export and Iran introduced restrictions and extended the restrictions on petrochemical products as well as -- including ammonia and urea. As far as the Polish market is concerned, naturally, what happened in the Persian Gulf had, as I presented -- as I mentioned during the presentation of our results for 2025, it also had an impact and resulted in introduction of several major changes in our organization.

We reacted quite dynamically. We set up operational teams, which were to monitor the efficiency and the profitability of all our production facilities and our production of core products such as ammonia, urea and obviously, nitrogen-based fertilizers. Those teams coordinated on a daily basis their activities. They took a close look and monitored very closely the prices, and they cooperated with our commercial department in order to plan our activities for the upcoming days, also concerning the restriction on production of our facilities.

Luckily, we're able to keep producing and utilizing our production capacities, but also our commercial department were focused on the maximization of our results without destabilizing the market, without creating artificial price inflation, especially considering the prices introduced by our competitors as it will be discussed in a second by the President of Management Board. As a result, we were able to react flexibly and dynamically and very swiftly to those dangerous and unprecedented, unexpected events in the Persian Gulf. So this is a positive element based on which we will build further operational changes across the board in our company.

As far as other positive events of the first quarter are concerned, we engaged in negotiations with the Ministry of Agriculture in Poland, but also at the EU level, European Commission level. The European Commission also noticed this gigantic problem, which resulted due to the blockage of the Hormuz strait. They noticed that it can impact the food security across all of Europe. So we engaged in very hot debates in the European Union at the EU level and incorporation in partnership with other fertilizer producers, we managed arrive on an agreement, as you know, Grupa Azoty is [indiscernible] of the Fertilizer Europe Organization.

And for the very first time, we managed to meet halfway and reach an agreement on 19th of May, Fertilizer Commission -- sorry, the European Commission published the Fertilizer Action Plan. And for the first time, the EU has explicitly linked the agricultural policy and industrial competitiveness as well as strategic autonomy with a presentation of fertilizer production within the European Union. This is a major change. And those of you who keep a close look on our business and also with regard to EU policy, you know that the chemical business, including the fertilizer business, is being pushed out of Europe. But this trend, I hope, has just been halted and maybe even reversed.

This plan, the Fertilizer Action Plan published by the European Commission focuses on a couple of elements, including strategic autonomy. We know that the production of fertilizers with -- in view of the food security should be as close to the market considering the effective -- efficiency and the price and the availability because they are enhanced in this way.

Secondly, the European Union or European Commission noticed and included in this document was the fact that it is necessary to ensure energy competitiveness in terms of prices of electricity and natural gas, which are used to produce fertilizers, which had a direct impact on the following two elements. ETS, EU Emissions Trading System and carbon border adjustment mechanism. So the directions of -- under the carbon border adjustment mechanism were analyzed, and this can have an impact on the competitiveness of our products in the future.

In other news, as a role, the European Union still sticks to a transformation strategy under green deal and the circular economy. However, certain elements have been added potential support for this transition process because we all know that any transition, any change is related to major investments and in short or longer term, it can result in higher costs and lower production volume. So this is counterproductive to the actual assumptions of the European Union. So the Fertilizer Action Plan is a strategic direction expressed by the European Commission, but it is the first ever -- first signal from the European Commission that will result in a change of our business and our prospects.

So we have been involved in those discussions, and we want to stabilize this market. And as I said, in the second quarter, I believe it will be down to details because we are involved in the discussions with the Polish Agricultural Ministry, Ministry of Agriculture, in order to secure the production of fertilizers so as to make sure that this market is stable and free of the turbulences of the Persian Gulf, so as to avoid the potential risk of additional dysfunctions, additional increases, inflation, price spikes or unavailability of products.

So we are preparing for the new season, and it shows the long-term rational thinking and we believe that the upcoming months will be beneficial to both Grupa Azoty, but also all the consumers of our products.

And other important developments in the first quarter, so Mr. Podgorski will give you the details, but Azoty despite of all the turbulences is responding proactively and is doing some internal transformation projects that I discussed last month, so we are about to launch a new internal structure, which will be our first step towards consolidation within the group in search of synergies. We are currently negotiating or perhaps consulting a certain code of internal cooperation. So the consultations are internal at this stage. And this will make us even more flexible and even more efficient in terms of managing the group's assets.

We have been also auditing our energy spending, which, as you all know, is one of our key cost items. We have tested decommissioning of our coal-fired boiler in Tarnow and we want to use production steam, especially in periods of maintenance downtime. So we are considering different options to replace the coal-fired boiler in Tarnow. This project -- another project that never stops is the project of improving our investment costs and administration costs.

So that's Azoty business, we also try to improve our real property management in the fourth leg of divestment strategy. We try to make one basket of all real property that we could sell or rent. As far as our synergies are concerned, there are two streams here. One stream is becoming more independent. So we have a lot of assets in our group and those assets will be providing services to the company, and we want to consolidate our projects in those internal companies. So we will be spending money internally.

And we are approaching the end of the first step in -- preparing our integrated production plan for 2027, so we do this with intercompany teams. We have developed a model that will help us evaluate the efficiency of our production as is. And then we will plan changes for the second half of the year looking at -- focusing at inefficiencies. So starting next year, we want to have one consistent group-wide production plan, which should generate huge operational efficiencies that will have a natural translation into the financial performance.

So that's it from me. Now over to Mr. Podgorski, who will give you the financial performance in the first quarter and discuss our proactive response in the first 3 months of the year.

Good morning, this is Jacek Podgorski. As you can see in this slide, the revenues, first of all, and EBITDA did not change -- sorry, revenues did not change over '25, but our EBITDA went up to PLN 317 million. If we exclude the impact of polymer project, then EBITDA would have been even higher. It would have been greater than PLN 340 million.

Now this slide is the best illustration of what happened in the first quarter of the year. Starting in 2025 and showing the impact of all the factors that we calculated in an aggregated manner, you will see that last year, our EBITDA was minus PLN 8 million. And then polypropylene project delivered PLN 94 million losses. So if you exclude the negative impact of polymers, we arrive at PLN 8.6 million. One-off event of PLN 97 million, that's revaluation of our reserves for the purpose of CO2 certificates. The price of those certificates went down. So their impact on EBITDA in the first quarter is positive.

Of course, we need to remember that in situations like these because of the macroeconomic environment, the price of those certificates will keep changing. So today, the price is higher than at -- on the 31st of March. So in the next months, the positive trend will be reversed. Anyway, if we extract -- if we take the 2025 result and we extract those items, we arrive at PLN 183 million. So this should be our benchmark, our point of reference to compare our performance in the first quarter '26.

Now the next item, the sales price went up by PLN 35 million. So our sales efficiency generated another PLN 35 million in EBITDA. And if we omit -- if we disregard other impacts that are negligible, we come at PLN 108 million. Most of that is the difference in gas prices because you need to remember that between '25 and '26, like the quarter-on-quarter, the gas price, the average gas price went down. So the additional EBITDA generated by cheaper gas that's roughly PLN 108 million. The PLN 14 million, that's the cost of sales. That's our optimization projects mostly related to the sales logistics and that's one of the milestones that we have been trying to implement inside the company.

Now our overheads are very low, much lower than 2025. And then this clearly shows you that we are -- we have improved our cost control and the situation seems stable in that area. So we arrived at PLN 341 million. In fact, most of the impact of the polymer sales was in 2025. That project still generates some negative impacts in the first quarter of 2026. That negative impact was minus PLN 24 million. So if we include the negative impact of polymers, that's PLN 317 million. That's our EBITDA. And that if you compare this to PLN 183 million, which is last year results, excluding the revaluation reserves, then you see the actual improvement, most of which is owed to lower gas prices.

Now let's look at our basic product groups or commodity groups. Agriculture, here, the main driver is nitrogen, fertilizers and ammonia. So here, our revenues went up by 9%. Sales volume went up by 10%. And hence, the EBITDA here for the whole agricultural sector is PLN 239 million.

Chemicals, here the situation is somewhat different. We need to start by making two important references. We have two products that's technical urea and sulfur that delivered extraordinary results. Of course, they are related to the Strait of Hormuz situation, and the protectionist policies in such countries as Russia, well, Turkey, just to give you the two largest. So those countries no longer export urea or sulfur.

And then if you add major imports of urea to India, then you will see that the disruption on the supply side, in both urea and sulfur, then we as the producer of the sulfur, we actually gained from it. When it comes to sulfur, the trend will surely continue. As you can see, other products, those other products still have a negative bearing on our EBITDA, and we do not expect major changes in the months to come.

Now Plastics. I discussed polymers before, but we also have caprolactam, polyamides and the information that we have, the news that we have are not good news. Unfortunately, we still have an oversupply of those products. And as a result, Grupa Azoty either abandon the production entirely, and if we keep producing, then the loss is generated. And there are a couple of drivers for this situation. In terms of polyamides, it is mainly due to the entire automotive segment situation. As we all know, across Europe, we do not produce any parts that are based on polyamide anymore. It's either that we import whole cars, relatively made cars from China or there is no need to use polyamide. So there is no demand for polyamide and the price and its impact on EBITDA is unfortunately negative.

As far as the outlook for the year is concerned, the President of the Management Board mentioned the impact of the Hormuz strait situation on our production and our income. We don't assume that in the case of basic fertilizers that we produce. The positive trend -- that positive trend that we see in the first quarter is about to reverse, we don't see that. So the restrictions on exports also imposed by countries that are producers puts us in a better situation because we have fewer competitors. And we believe that in the upcoming months, we will be the beneficiaries of that situation because in the local market, the competition has shrank.

And the same applies to sulfur. What we see in the sulfur market is inflated prices. And this has a ripple effect in the supply that we ensure as Grupa Azoty, is not supported by the supply from other destinations. As a result, the prices are growing, and this has an impact on the final product, on the end product. This is why we see that some of our customers are dropping production altogether or they reduce the stock volume. Keeping the fingers crossed that the situation in the sulfur market is about to change in the nearest future. And this is what we assume as well. We don't think that this positive trend will reverse. So I believe that the second quarter will be positive in this respect in this market as well.

Moving on, as far as prospects and outlook is concerned, as you know, polymers, the project was sold under a preliminary agreement, not yet a final agreement, but we have a preliminary agreement and this allows us to expect that the final agreement will be signed in the third or fourth quarter of the year. And this problem, this issue, that had such a heavy bearing on our business will be finally neutralized. The discussion -- the negotiations with the banks are ongoing. You see all our communications, the standstill agreement was extended on Friday by additional two weeks.

This standstill is to be interpreted in the following way. The banks see that the company is focused on better and tighter cooperation with the banks. And this gives us some space, and this will allow us to file documents or submit documents within the coming 2 weeks that were required under previous agreements. We don't see any threat of a failure on the part of the company, as far as the execution of the standstill, the agreement is concerned. Obviously, some of it is beyond our control. But we keep constant -- we keep in touch constantly with our stakeholders, shareholders and the banks. And I believe that we'll be able to manage that problem and finally resolve that issue.

You probably remember that the [ term sheet ] is also subject to negotiations as we speak. And we are close to the end of this phase. And I believe that in the nearest future, this will all be a base for our further actions. First of all, the issue of shares, the last bullet point on this slide, talks about it. And secondly, we will be able to continue the process of preparing a restructuring agreement, which will give us space to breathe again for the upcoming couple of years in order to negotiate with the banks to make sure that the company comes out of this financial problem and issue in the end.

Thank you very much for this discussion of financial performance and operational performance of Grupa Azoty. We'll now move on to the Q&A session. The first question to Marcin Celejewski. What will happen in terms of the export of fertilizers to Europe and European Commission's decisions?

Yes, the European Commission suspended temporarily the export duties on certain fertilizers, including urea and ammonia in order to reduce prices and support agricultural producers and also take care of this gap in imported fertilizers. And I believe that in the end, we will be able to increase our production capacities and supply our products not only in Poland but also across the European Union. I'm talking about fertilizer products, obviously. But the prices -- the duties went in, were really put on hold. However, the decision does not impact any antidumping duties on the imports of fertilizers from Russia and Belarus. This is good news. And as far as Russia and Belarus is concerned, those antidumping measures will be introduced as of the first of July.

So looking at this situation and imported fertilizers from Russia and Belarus, they are a margin of the supply in our country, and I believe that this increased duty will stop finally the import of those fertilizers from Russia and Belarus, from those aggressive producers. So I believe that this impact -- this measure introduced by the European Commission should not increase the prices too much. So the imports will come from mainly Northern Africa under the quotas that we have and you should not forget that some expertise will be introduced in other markets as well.

And some of the markets which were intensively -- which intensively export their products, they will feel that decision, and our policies very reasonable. So we believe that the prices of fertilizers should not be impacted too much by this decision.

Two questions to Jacek Podgorski, I'll combine them in one. Would you expect any one-offs in EBITDA in the upcoming quarter, maybe revaluation of provisions or CO2 emission, right? And why -- where does the price of CO2 emissions come from?

Yes, I discussed it during the presentation. So the positive impact was recognized in the second quarter -- in the first quarter. In the second quarter, we believe that those provisions will have a negative impact on EBITDA. In terms of the prices of CO2 certificates, this market is volatile and the prices are beyond our control. So they are outside of our scope. We keep looking at the prices of CO2 certificates. And I believe -- and also the impact of those changes on our EBITDA.

So during the presentation, I tried to show you the impact of the so-called Anova -- of the one-off, sorry, because we don't want to show anything as a permanent success, while this is a one-off event. So as you can see, this amount was reported as a one-off.

Next question, Agro segment reported an increase of 157% year-on-year. Can you tell us right now that the fertilizer products are, again, a flywheel of your growth?

Well, it looks that they have returned to that path, the path of growth, which was the regular -- standard path and trend for fertilizers because fertilizers are a part of our business, which will bring us the highest income and the highest positive impact on EBITDA. And we see it as we speak. When you look at this slide, this additional positive impact actually focuses on ammonia and -- focuses on ammonia. And Mr. Celejewski mentioned that during the conference, during the earnings call, ammonia is a semi product, which is very sought after.

And because of the introduction of duties, we believe that in the coming months, the situation will persist. In addition, the fertilizer season is extended in Poland because we started the season a little bit later than usual because we had temperatures that are really low still in February, minus 20-degree Celsius. And then there was a spell of drought and as a result, the farmers did not apply fertilizers on their fields.

So the season will be prolonged, will be extended, and we will sell our fertilizer products even in June. So the sales levels will be very high until June.

A couple of questions. I will combine them in one. When will you have the issue of your shares?

Definitely by September 13, 2026 is the deadline. The first issue, which has already been planned will be performed by this deadline. In terms of the exact schedule, we're working on it and this is teamwork. This is a team effort, not only within the company, but also outside of it in cooperation with banks as well and financing institutions. So we'll try to wrap up the share issue as soon as possible.

A question from our fellow journalist, Dariusz Malinowski. Please discuss your sulfur business in more detail? Do you benefit from the closure of the Hormuz strait? What are your prospects for this business? And is there more interest -- higher interest among your customers for sulfur and demand for sulfur?

As I said before, sulfur is a very profitable product for us and it will remain so in some foreseeable future. We don't know for how long, but obviously, on export restrictions introduced by some countries, including Russia will have an impact on the shortage of sulfur on the market. It is not easy to replace the sulfur that is produced in refineries as a byproduct or a waste product overnight. And we are not able -- we as well are not able to produce more waste sulfur at Siarkopol.

So I believe that those prices will -- higher prices will persist for quite some time. It will have an impact on a positive EBITDA, but -- and there's also other side of this coin. As I said during the presentation, our sulfur customers find it increasingly difficult to address the higher price of sulfur and its implications to the production of the products. It might even restrict their production, their own production. So sulfur in the upcoming couple of months or maybe even in the longer term, will have a very positive impact on our EBITDA.

The last question to Marcin Celejewski. The EuroStat data suggests 80% drop of imports from -- on fertilizers from Russia and Belarus. What is the impact for Grupa Azoty in the -- in your positioning in the European market?

I will refer to what Mr. Podgorski said before whether fertilizers will remain a key product in our portfolio because this is something that this question refers to as well. And also as far as the directions outlined by the European Commission in the Fertilizer Action Plan. So the marginal imports of fertilizers from the aggressive importer that Russia and -- importers that Russia and Belarus are will definitely have an impact on a certain gap in supply. But we have discussed it with the Ministry of Agriculture, and we take measures in order to prepare ourselves to that situation in the short term to level it out, to flatten out that difference and remove that gap.

So I'm talking about our discussions with the Ministry of Agriculture, but also it is up -- it is also -- this discussion also takes place and is escalated to the European level. So we have a reduced supply of fertilizers in the market that are imported. And there are two elements to discuss here. I believe that in view of the fertilizer plan, which defined the fertilizer market as a major -- as a market of major importance for Europe, and we have a couple of companies, including Grupa Azoty as the second largest producer of fertilizers. And I believe that in the short term, those mechanisms that are worked on by Grupa Azoty in partnership with the Ministry of Agriculture will help us to overcome that problem, that shortage and find ourselves in a very good position in the end.

And also, we have great resources in Poland. And Grupa Azoty is a great asset, great resource as the second largest producer in Europe. So we need to also consider the increase of our own production capacities.

In reference to sulfur, as discussed by my predecessor, it is a great positive news that we have an increase in the price of sulfur. And we take benefit from it. We tap into it and leverage it. But we don't want to have a situation where we are maximizing the benefit in the short term, but we might -- must not compromise our situation in the long term. And considering the directions outlined by the European Commission and also our discussions with the Ministry of Agriculture, we believe that the results we're reporting for fertilizers show very clearly that fertilizers are a flywheel of our business and they are at the core, at the heart of our business.

And natural direction that we must take is to strengthen our production capacities here. So tactically speaking, maybe in 2027, the Management Board will start the discussions on how to increase our production capacities because we do have them, and we can increase the production of fertilizers and ammonia as well. Because this, I believe, is a very solid foundation, our major competency -- competence, sorry. And in the longer term and the foreseeable time, it will remain a flywheel. The main driver for Grupa Azoty's further growth, and we will build our additional pillars of our business around it, as we discussed during the previous conference.

After the second quarter, I believe that I will be able to discuss it in more detail. So this is the answer to that question. It's pretty complicated, but in a nutshell, in the short term, we will do our best in order to secure and manage that gap because the gap is there due to the restrictions of imports of fertilizers to Poland. And Grupa Azoty, we look at the situation we're consolidating, we are trying to maximize the utilization of our production capacities based on negotiations with the Ministry of Agriculture and maybe with the European Commission in the future as well.

But we are focusing on the investments on our core business, not on projects such as polymers. We focus on our competencies. We focus on our core business where we represent a great strength, not only for Poland, but also for the European Union.

Thank you very much for your participation in today's earnings call. Thank you for your attention. Thank you for all the questions. And thank you to the speakers for presenting and discussing the performance of Grupa Azoty. We will see you again after the publication of our results after the second quarter. We will inform you of the time and date of that earnings call shortly. Thank you very much.

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

Good morning, ladies and gentlemen, and welcome to the conference call devoted to the financial performance of Grupa Azoty published yesterday.

Our results will be presented by Andrzej Skolmowski, CEO; Andrzej Dawidowski, Vice President; and Pawel Bielski, Vice President of the Management Board. Before we move on to the presentation, let me remind you that you could ask questions via the grupaazoty.pl website.

The floor is over to Andrzej Skolmowski.

20 months have passed after very demanding negotiations with the financing institutions and the recovery measures. As a result, we have gained approval for the publication of the stabilizing agreement. We also secured a waiver for the non-delivery of the net debt-to-EBITDA ratio in order to stabilize the performance across the Azoty shareholders. All the leading companies across the group reported better performance in the 9 months of 2025 compared to the previous year.

EBITDA for the 9 months 2025 came in at PLN 391 million excluding the Grupa Azoty variations, it was up by -- it was up and came in at PLN 315.9 million. The improvement of our performance in a very challenging macro situation is the result of the delivery of an end-to-end Azoty business recovery program. I, therefore emphasize the importance of this program and involvement of the employees across the Azoty Group. Thank you very much for your engagement and involvement.

We have published the strategy up to 2030. We will deliver the strategy while structuring our net bank debt. The strategy lives up to our competencies, ambitions, and possibilities and will only focus on our core business. We will deliver the strategy in a very challenging market situation. Our segment -- main segments, four segments: Fertilizers, Chemicals and Advanced Chemicals and Plastics, will face a lot of problems. So, we will focus on logistics and we also will focus on the new segment, Chemicals for Defense.

We have convened the general meeting of shareholders in order to take a decision on a two-stage issue of shares in order to recapitalize the company and deliver strategic investments. In the first phase, we want to issue more than 33 million Series E shares at a total value of PLN 600 million, addressed only to the state treasury, with no pre-enterprise for former shareholders.

In the second stage, we want to -- or we consider the issue of -- or maybe a couple of issues of up to PLN 40.5 million, excluding pre-enterprise as well, addressed to market investors and the state treasury as well. After the two stages of the issue, the share of the state treasury and our shareholder structure would not exceed 50%. This is a very important stage in the restructuring of our bank debt process and is expected by the entire market and our investors.

Grupa Azoty Polyolefins had an impact on our performance and negative impact. However, it was down year-on-year to one-off events, and it's the payout of guarantees. But this is a one-off event, as I said, because to a large extent, due to the under-utilization of our capacities, due to lengthy shutdowns, to the regulation of our plants, and repairs of our plants, but also very low demand in the polypropylene market and low spreads, which were due to the macro situation.

Our operations at Grupa Azoty Polyolefin is not profitable still. It's worth emphasizing that the limited cash that we have at hand, as well as the agreements we have between financing institutions, impact the delivery of the Polymer Polyethylene -- of the Polyolefins of the Grupa Azoty.

Our special purpose vehicle also has an impact under the agreement with the general contractor, and we paid out more than EUR 170 million under this agreement due to delivery of the contract. And we focused on the plans and schedules for the repairs and recovery of our operations for this particular plant. This was welcomed by the finance institutions, and we should be financed by the guarantee. However, this plan has never been delivered due to the fact that the banks did not agree to it in the end.

In October, there was a set-off by the financing institutions in regards to the payout or payback of the credits. On October 15, Orlen placed a non-binding offer for the purchase of all the shares of Grupa Azoty Polyolefins at the value of PLN 1.022 billion. This offering assumes that all the shares and assets will be taken over on a cash-free, debt-free basis, and we will receive sources of cash to finance our payables. We focus on this offering very much. We have signaled time and again that the solutions to our problems related to this project will be delivered in cooperation with Orlen.

A word of gratitude to all our business partners, to all our customers, for your trust on an ongoing basis. This is a great capital, and it will bear fruit and bring the company back on track. A word of gratitude to our employees as well for their involvement in this recovery process, the fight, the struggle to have savings on a daily basis. Without this involvement, we wouldn't have been able to perform better results.

Let us now move on to discuss the situation in the market. The market environment, especially in terms of the prices of electricity, gas, and coal in the third quarter, was favorable to Grupa Azoty in the Q3 of 2025. We see declines, especially in terms of the prices of gas, based on an LNG supplies from outside of Europe to Europe. Only in September, prices stabilized, and we saw an upward trend. And the main determinant here was the publication of assumptions for the EU's 19th sanctions package and instability in the Middle East.

In terms of electricity, the price of electricity, we see a decline in the third quarter, especially due to increased production from renewable energy sources year-on-year, going up by [ 18% ] in Poland. And as a result, unstable operation of conventional sources that are coal and gas-based sources towards the end of Q3 2025, which translated into a higher price of gas.

In the case of coal, at the end of the quarter, we saw the lowest levels of prices of coal for the past 4 years, which was due mainly to a higher production from renewable energy sources in China and increased demand and consumption across the entire continent of Asia, which translated into a major drop in the price of coal, also due to lower prices of gas, making it easier to use coal sources and gas sources. And as a result, it was translated into lower prices of coal itself.

In terms of the Agro segment in the Agro market, it was to a large extent determined by the situation and sentiment of farmers, which were relatively low in terms of expectations for the prices of agricultural products across the quarter. The demand was dwindling for fertilizers. It was very weak. And also, the global balance for the demand did not improve on the prices levels. The prices went up for urea fertilizers, which increased the prices across the board for all other nitrogen-based products in the group.

Towards the end of quarter three 2025, we see instability in terms of regulatory environment or expectations related to the European Union, especially CPAM and ETS2, which did not translate positively into the situation of producers across the European Union.

The European Market for compound fertilizers was characterized by low levels and stabilization of prices. The demand for such products were pretty low in this period, and the spreads between feedstocks and the final product prices were shrinking. Conversely, higher spreads were only seen for ammonium phosphate, so DAP. And in this area, spreads in the third quarter were going up. Upward trends were seen for the prices of our main feedstocks, that is sulfur and potassium chloride, while phosphate prices were stable.

When it comes to the challenges related to the Agro segment, we still see the impact of import of product both from the east and from the other regions from outside of EU and Europe. We've noted a significant decrease of almost 45% year-to-year when it comes to import of fertilizers. But still, the volumes that arrived to Poland in the first quarter -- 1st half of year 2025, were groundbreaking. And this, in case of the division of sales in fertilizers in our region, meaning Poland, is going to have a significant impact on our sales till the end of 2025. We've noticed that the decrease of volumes of imported products from Russia and Belarus of over 76% is positively transposed. But the results, as we've indicated before, are going to be visible in the first quarter of 2026.

When it comes to Chemicals, stable spreads in products of the Titanium White. The market is still under pressure when it comes to decreased consumptions from Automotive segments and Construction segment. Similar case in Oxo alcohols, fuel spreads are stable with a slight increase tendency in the third quarter of 2025.

Segment of Plastics. This is probably the most challenging ones in the Azoty Group, especially when it comes to the Automotive segment and increasing import from Asia, especially from China. But it is not only about the product polyamide 6, but also ready-made products and ready-made cars, which are being imported from China and relate to decrease in production in the EU, a significant decrease of raw materials and prices of products. Very low level of prices from the very beginning of the first quarter of 2023 don't allow us for rentable sales of this category of products.

We've completed 20 months of talks, and we consequently implement the previously accepted repair program, and we on an ongoing basis are presenting the results of it. We've completed almost 20 months of demanding talks with financing institutions. We have been implementing consequently the accepted plan, and we on an ongoing basis are presenting, and also for two financial institutions. The result of talks is an agreement, a consent to continue the stabilizing agreement. It is currently binding till 28th of November.

As I said before, we've also been working on solutions, and we still work on solutions that are going to allow the group to shift from the understandings with banks that were established for several weeks or a dozen weeks to a phase of long-term understanding. And at the same time, we are preparing for the new emission of shares of Azoty Group. We underline that on the ongoing basis, we are meeting all the duties of ours related to paying the debt, which are resolved under the financing agreements. And this ensures the maintenance of the current situation.

For the 9 months of this year, the group increased the utilization of multi-purpose credit limits by PLN 54 million and utilization of factoring limits by PLN 117 million. The banking net debt-to-EBITDA ratio at 30th September of 2025, just as it was in the case of 30th of June 2025, was recorded a positive value, and it equaled over 14x -- 13x.

The positive EBITDA caused that the net debt and investment expenses that we've been implementing caused that the net debt was increasing in a limited way. It was PLN 263 million. And on the 30th of September 2025, that the group's available credit limits amounted to PLN 2,028 million. PLN 1,296 million is Polyolefins and the factoring of the total available financing limits at 30th September 2025 equaled PLN 1.726 million. An additional liquidity buffer of the group's net cash balance, which amounted to PLN 732 million at September 2025. The stabilization agreement of the Polyolefins Azoty Group with financing institutions, which regards financing of the Polimery Police project expired on the 30th September 2025. And as per the day -- on the date of the creation of the report, we have ongoing talks with the banks about the continuation.

On the 1st of August, we have signed a memorandum of understanding before Azoty Group, Azoty Police Group, Grupa Azoty Polyolefins and Orlen, effective retroactively from 31st of July 2025. The conclusion of the memorandum constitutes another important step in the process of seeking solutions aimed at stabilizing the financial situation of Grupa Azoty Polyolefins.

On 14th August 2025, the Grupa Azoty Polyolefins decided to withdraw on the 14th August from the EPC contract for reasons attributable to the contractor and to charge the contractor contractual penalties in connection with the withdrawal of the amount of -- and the withdrawal notice and the debit note for the contractual penalties were delivered to the contractor on 14th of August.

On the 15th of October, we've received from Orlen a non-binding offer to acquire shares in polyolefins in Grupa Azoty Polyolefins. The offer related to company's shares, including assets comprising it, free of encumbrances and on a cash-free, debt-free basis.

On the 13th of October, the financing institutions satisfied their due receivables accounting to EUR 76.8 million under the credit agreement for financing the Polimery Police Project.

The financial results that we presented for the third quarter are in line with the published estimates that we published several days ago. Azoty Group has PLN 2.9 billion of income in the third quarter, which means a decrease year-by-year by 6%. This is mainly driven by lower revenues in the Advanced Chemicals segment, in the businesses related to Plastics and Chemicals. The Agro segment maintained a positive year-on-year revenue growth trend.

The group reported EBITDA of PLN 391 million, with a margin of 13.5% in the relationship to the same period of the last year. The consolidated EBITDA increased by PLN 511 million and the EBITDA margin by 17.4 percentage points. The improvement of debit and EBITDA was recorded across all Grupa Azoty segments.

In the results of the third quarter, we've taken into account the settlement of the EPC contract related to the Polimery Police project, recognized on the one-off item in PLN 316 million. The consolidated EBITDA of the group for the third quarter without Polyolefins would amount to PLN 186 million.

The main factors affecting the year-on-year charge in EBITDA were as follows. One of the events that I spoke about related to the implementation of Polimery Police project, the total positive impact of them equaled to more or less PLN 316 million and more to that changes in raw material prices.

The costs in the third quarter 2025 year-on-year decreased by PLN 53 million, mainly in the sector of the costs of labor due to lower amount of jobs in the whole of Azoty Group. There was an improvement in the efficiency of the groups.

In the third quarter of 2025, Grupa Azoty noted lower costs of the use of raw materials by PLN 398 million. Of course, the biggest impact on lowering the costs was due to the decline in natural gas prices and more to that, unit consumption costs of electricity, phenol, propane, and propylene decreased. In the period discussed, gas accounted for 38% of the raw material consumption costs, which was 2 percentage points higher than the corresponding period of the previous year.

Majority of the companies from Azoty Group noted improvement of EBITDA results and achieved a positive level. The decrease of EBITDA by 29% was in the COMPO EXPERT Azoty Group.

The key drivers of the weaker performance in the third quarter were primarily market factors, such as macroeconomic slowdown, unfavorable weather conditions, and high inventory levels. Despite of the decline, the company continues to generate a positive result. In the case of Grupa Azoty Polyolefins, the positive EBITDA level results from one-off events related to the settlement of the Polimery Police project.

In the Agro segment, the main drivers were higher sales products and also price of products and declining prices of gas. And you remember about NPK prices and an increase in the cost of production of compound fertilizers. This was mainly determined by high imports of fertilizers from other regions. We're talking about more than 3 million tons in the first half of 2025, which will have a major impact on volume results of our production and sales in the second half of the year.

Moving on to our EBITDA performance, EBITDA improved to 3.7%, going up by 8.1 percentage points year-on-year versus the third quarter of 2024, and the improvement from minus PLN 81 million to plus PLN 3 million.

In the Chemicals segment, as we said before, it was mainly determined by declining demand or no demand from the Construction or Automotive segment, but the improvement was seen for AdBlue and technical urea. Other volumes of sales are going down, especially for titanium white and Oxo alcohols. These are the products that are heavily impacted by the two segments.

In terms of the production of caprolactam, we did not resume the production at Pulawy due to dwindling very low demand for Polyamide 6 across Europe. The entire segment came in at minus 6.1, and that is translated into minus 1%. The improvement was, however, up by 5.7 percentage points year-on-year.

In terms of the Plastics segment, we reported a positive EBITDA result due to one-off events that is the recognition of contractual penalties under the Grupa Azoty Polyolefins agreement. Without this effect, we would have recognized a negative EBITDA. Plastics were impacted by a very low demand or declining demand from the Automotive and Construction segment and also declining prices of products. The improvement of this result, considering and not considering one-off events, was recognized. However, it did not allow us to recognize positive EBITDA in a traditional sense that is without one-offs.

In the period of nine months of 2025, Grupa Azoty generated consolidated results from sales at the level of -- again, within nine months of 2025, Grupa Azoty generated consolidated sales revenue at the level of over PLN 10 billion and EBITDA at the level of PLN 312 million with EBITDA margin, which came in at 3.1%, going up by 6.1 percentage points year-on-year versus quarter 3, 2025.

Consolidated EBITDA for the group for the nine months of 2025 without Grupa Azoty Polyolefins would have come in at PLN 346 million. It is worth emphasizing that as of the fourth quarter of 2024, the group without Grupa Azoty Polyolefins has recognized positive EBITDA in the so-called core business.

In the Agro segment, the EBITDA margin was at 2.8%, going up by 5.4 percentage points year-on-year versus quarter 3, 2024. In the Chemicals segment, the EBITDA margin was at minus 5.1%. Despite this negative result, it was still higher by 5.3 percentage points year-on-year.

The EBITDA margin generated in the Plastics segment was at minus 9.1%, going up by 2.5 percentage points year-on-year. Obviously, these results in the Chemicals segment were impacted by the result of Grupa Azoty Polyolefins.

In the Agro segment, the key factors determining our results included a considerable increase in production volumes and sales, compounded or combined with the concurrent increase in the prices of products and considerable increase in the prices of gas. As my colleague has already mentioned, the demand for Chemicals remained pretty low and limited, and this was one of the main determining factors in the Chemicals segment.

The prices of feedstocks in the Plastics segment, such as phenol or caprolactam, were going down as well. And the demand across most of our sectors of our customers remained stable but low.

As we said before, in the third quarter alone, but also for the 9 months of the year, all our main Grupa Azoty Group companies reported higher performance versus the Q3 of 2024. At Pulawy, EBITDA came in at PLN 55 million. At Police, it was at PLN 72 million. So we see a considerable improvement versus last year's negative performance.

Grupa Azoty Kedzierzyn reported EBITDA, which was 4x higher than in 2024, and COMPO EXPERT reported EBITDA, which was up by 15%, and the company invariably generates positive results across the board, including at the level of net profit.

In the 9 months of 2025, as we said before, we generated consolidated revenue from sales at over PLN 10 billion, and we need to emphasize that EBITDA, which came in at PLN 312 million, excluding Grupa Azoty Polyolefins, would have been at PLN 346 million.

A couple of words on our investment projects. In terms of our CapEx projects for the 9 months of the year, we focus on CapEx Control Tower, and we are analyzing the entire portfolio of our CapEx projects. Due to our current financial position, we took steps in order to limit our CapEx spending, which is quite visible if you compare it to last year's CapEx. Our CapEx spending, investment spending, were limited to a bare minimum. We focused only on our key investments of major importance to our business across the group.

Right now, we have four major investments: two in Tarnów and two in Pulawy. In terms of Pulawy and the construction of a power-generating unit called base unit, we are currently analyzing the selection of the most optimum solution to finish that project, and we are taking inventory, and Polimex Mostostal part was due to Polimex Mostostal's fault. This part of the contract was terminated.

After the publication of the strategy until 2030, we are now looking at a very consistent delivery of our goals, which were presented in that very strategy, and its operationalization. We are analyzing a non-binding offer which we received from Orlen, and we are considering all the potential scenarios in relation to a very complex, comprehensive approach to that particular situation. We announced the general shareholders' meeting planned as at the 13th of February.

At this meeting, we want to ask our shareholders to approve of the issue of shares into stages. We will continue our negotiations with our financing institutions in order to arrive at a long-term agreement which will stabilize the group's financial situation.

We keep consistently keep delivering the Azoty business program, and the results of this program are already visible in the improving EBITDA level. This program brings together a couple of hundreds of our employees, and our ambition is to make sure that some of these initiatives that are delivered under this program, the Azoty business program, so the recovery program, will change the group thoroughly.

The business environment in the Agro segment is changing positively, and the customs duties introduced as of the beginning of July are bearing fruit, initial fruit. However, we will still have to wait for the effects of those new regulations until the beginning of the new year.

The improving EBITDA is visible. We are consistently delivering the assumptions of our recovery plan. We are emphasizing that we are already in the midst of the fourth quarter of the consecutively reported positive EBITDA across the Azoty Group.

Therefore, we need to still deliver our goals in terms of our negotiations with the financing institutions and the completion of these negotiations. We also need to prepare ourselves to a major breakthrough event. That is the general shareholders' meeting convened as at the 13th of February 2026.

Thank you very much for this presentation, and now we can move on to a Q&A session. The first question, Dariusz Malinowski. Mr. Dawidowski has already partially answered that question.

Do you see any effects of the new tariffs on Russian fertilizers, and if so, how, and to which extent, and when will these effects be visible fully in the Fertilizers segment?

As I said before, we do not see those effects yet. They were only implemented as of the 1st of July. The very high record-breaking, if we compare it to the previous year's levels of import in the first half of the year, translated into the situation in the market. They are in Poland, but they are still in the transshipment terminals. And the prices are pre-customs duties prices still. We expect that the effects will be shifted by 6 months. That means that the effects will be seen as of the 1st of January 2026. We need to remember that as a result of these changes, the gradual changes of customs duties, we can expect yet another increase in the prices of products transported or imported from Russia and Belarus as of the second half of 2026.

Second question is on Agro segment. What is your assessment of these higher customs duties on the prices of products across Poland?

As we said before, we see that the higher prices are not of major importance in Poland. Those increases are not significant. Fertilizers in Poland are sold at very competitive prices versus other countries. So, we cannot say that it has any major impact on the situation of farmers.

The offer of Orlen is binding till December this year. We are approaching the end of the year. When are we going to find out what's the final decision of Grupa Azoty in the meta?

The offer of Orlen is an offer of purchase 100% of shares of Azoty Polyolefins. As we know, we do not own 100% of shares, and we are right now in the process of talks with institutions that are financing and the ones that finance the whole project.

The amount offered by Orlen is a very demanding task. It requires a lot of effort from all the sides to come up with the understanding. In the nearest future, the offer is binding till the end of the year 2025. We assume that we are going to get the initial understanding in between parties, shareholders, and Orlen, and we are going to do that under the condition of the consent of all the sites.

When it comes to Polyolefins, why do we want to sell Polyolefins to Orlen for PLN 1.022 billion if the construction of the plant costed over PLN 7 billion? Why are we selling it for a lower price? Shouldn't it be higher? Why is it so?

We want to underline that this is the public offer that has been submitted by the bidder, by Orlen. The offer is available to all potential other investors who could submit a different proposal. We underline that, of course, when looking at the cost of construction, the offer is several times lower, but the situation on the market is somewhat matching similar levels of quotations that we observe in other similar transactions, including similar installments which are being -- installations that are on the European Market. So, the offer is public, publicly available to others who could submit a counter proposal.

The question related to financial results. What was in over PLN 400 million of income of remaining operational activity?

In the result of the first quarter, we've also included one event that is one of this is an agreement with a Polish mining group. It's a settlement at the amount described in the financial report and in the ongoing report too.

Now, a question related to the segment of Chemicals for Defense. How the company sees the further cooperation in the sector with PGZ Company, PGZ?

The company PGZ, we cooperate with it in several scopes. First of them is preparation to production of the product components which are going to be used in production of explosives. The cooperation with Polish Armaments Group, meaning PGZ, has several sectors. The second one where we have big competencies is the engineering sector of the work on design.

We have communicated it yesterday that we've established yet another agreement with one of the companies that belong to the Polish Armaments Group. Both paths of cooperation are what we are going to continue.

Next question. In the fourth quarter, EBITDA result of Azoty is going to take into account the compensations for the industry.

In the fourth quarter, information on the energy-intensive sector, information related to your question will be published in the first quarter of the next year, because it's going to regard the fourth quarter of the previous year.

Thank you very much for your kind attention. Those were all the questions posed. So, see you on the next press conference.

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

Good morning, ladies and gentlemen, and everyone to the conference call devoted to the financial performance of the Grupa Azoty Group for the first half of 2025. Today's speakers include Andrzej Skolmowski, President of Management Board of Grupa Azoty; Mr. Pawel Bielski, Vice President of Grupa Azoty; and Mr. Andrzej Dawidowski, Vice President. [Operator Instructions]

And now the floor is over to Mr. Andrzej Skolmowski.

Good morning, everyone, and welcome to the earnings call devoted to the presentation of our performance after the half -- first half of the year. According to the recent report by Cefic, the European chemical sector deals with a deep crisis with the production figures way below the average of recent years, and the utilization of production capacity is lower than 70%. As sector, we need to face a lot of challenges related to regulation, high prices of energy and weak [ dwindling ] demand and ever growing dominance of China. We know that the most important problem we have to face in Europe are regulatory costs and electricity and energy costs between January and July 2025.

The prices of gas in Europe were threefold the prices of -- those prices that are paid in the U.S. and China is strengthening its global contamination and those conditions that is important to discuss the regulatory issues and framework and looking for competitive energy sources. Let us remind you that the Chemicals segment uses natural gas in the range between 25% to 50% as a feedstock and the rest is used for the production of steam and electricity. We can expect the difference in prices between Europe and our global competitors will remain significant until 2030, which additionally will weaken our position and standing in Europe. If we analyze our production data in the first half of 2025, we can see that production in European countries was up by only 1% year-on-year.

However, the chemical sector in Europe has reported a major drop of 2.5% and the businesses, which we sell our products to, for instance, the automotive business report a drop of over 4%. The production of chemicals in the European Union remains 20% lower compared to the precrisis times and the prices of chemicals remain at a level comparable to 2024. Chemicals, the chemistry in general is a mother of other sectors. But we need a brand new, more innovative approach in order not only to strengthen the position of the entire sector but in order to stop the closing down of the chemical production facilities across Europe. Concerning the major restructuring program, turnaround program, we need to remember that the first half of the year was another challenging period for the Grupa Azoty Group.

We operate in a very challenging market conditions, but the consistent implementation of the Azoty business program is already bearing fruit. We are reporting a positive EBITDA in our core segment, core business segments. We'll talk about it later on. We continue negotiations with the banks in order to strike a long-term agreement. We have presented our proposals and negotiations are ongoing, and we are deeply convinced that we will, in the end, reach a compromise that will be satisfactory to all sites. We are paying our dues as they come, and we are keeping our liquidity level at a satisfactory level of liquidity. We are looking into Polimery Police, concerning a new partner and a new owner, potentially. We want to -- we have resumed the negotiations in order to find an agreement, and we do our best in order to stabilize the financial situation of GA Polyolefins and complete this project.

We're looking at a potential transaction concerning the sale of all or part of the shares of the company. We do not want to present some solutions that are not real. We will not be able to solve these problems on our own because we do not have sufficient funds in order to complete this investment and commercialize it. So in these very challenging conditions, we are ready to complete this project using the resources that we have at our disposal. We have the guarantee from the general contractor and we are using this guarantee as it was intended before. We are keeping up with the work in order to enter the defense sector. We have signed letters of intent with the companies of Polska Grupa Zbrojeniowa. We want to have a strong presence in the defense sector. And we know that without the Polish chemical sector, those projects would not be possible.

In those challenging conditions, we are arriving at very good agreements including with the Polska Grupa Górnicza or the supply of thermal coal with a value of PLN 350 million. As of July 1 this year, higher duties on fertilizer from Russia and Belarus were introduced. However, we need to wait for the results of these regulations coming into effect.

To summarize this introduction, let us extend our heartfelt thanks to all our employees for their involvement or their engagement and for the cost they are actually bearing. And without their efforts, the improvement of our results across the group would not be -- would not have been possible. In recent time last week specific, the Supervisory Board announced changes in its composition.

We have communicated the deals in our current reports. Last week, the Ministry of State Assets appointed a new representative to Supervisory Board.

Moving on to work environment. From our perspective, Grupa Azoty Group's perspective, the key feedstocks and energy feedstocks were stable in terms of the prices or reported higher prices, for instance, gas. As far as gas is concerned, the 12% increase was mainly due to the ongoing conflict in the Middle East and Ukraine and some -- there were some problems with LNG transport and higher freight costs, which translated into the higher gas costs across Europe. Actions by the European Commission aimed at complete stop or ban on gas imports from Russia also translates into unstable situation and high gas prices. At the end of the period, we also saw lower demand from Asia, which in the last quarter of this period, that is the second quarter of 2025, resulted in a slight decrease in gas prices across the period.

Compared to the last year's data, we are talking about an increase of gas prices by 12% and in terms of coal due to lower demand across Europe and lower production in the Chemicals segment reported a drop of 12%. Electricity reported stable prices and the same applies to CO2 emission allowances. In terms of our key market environment, I'm talking about our consumers, our farmers. The first half of the year recorded an increase in terms of agricultural sector. I'm talking about an increase of 1.5 percentage points quarter-on-quarter. This is mainly due to higher prices of agricultural products. We know that it was only temporary because the next quarter, quarter 3, already showed major drops in terms of prices, mainly the prices of wheat, which reported record low prices. What's important for the Grupa Azoty Group are higher prices of fertilizers in the world, which allowed us to increase the spread between gas prices and product by 21%, which allowed us to rebuild the profitability of fertilizer products across Europe, which will translate into the performance of our Fertilizer segment.

In terms of compound fertilizers, the spread between feedstocks and final products, end products, was eroded going down by 3% in the second quarter of 2025 compared to second quarter of 2024. Also in comparison with other quarters, for instance, in the first quarter of 2025, the drop in spread was even higher. The only product that reported a positive increase in the spread and higher profitability was a key NP product [indiscernible] in which case, the spread went up by 30%, which was due to a major increase in prices in Europe. The Agro segment is looking at major increases and challenges in the future. 1st of July 2025, custom duties were imposed on imports of product from Russia and Belarus. However, we do not see any significant effect of those measures for European producers. The increase in the first half of the year was very high, 7% year-on-year. And imports from Russia and Belarus in the first half of the year were also up by 83%.

We're looking at it, as we look into the future. Obviously, the introduction of custom duties was positive for European producers. However, we can expect the results to be seen only in the fourth quarter of 2025 and the first quarter of 2026. A major increase in imports in the first half of 2025 was mainly due to building high stocks in ports and terminals and also in warehouses in Poland before we have built stocks. As far as the market environment in the Chemicals segment, we are looking at a very critical situation and [ export ] to alcohol spread has dropped a lot by 43%, profitability of the business remains to be very challenging. The prospects for the second quarter 2025 and the third quarter of 2025 was a little bit better, but was rebuilt. However, demand remains very low, and the oversupply across European markets means that it will be very difficult to impact. So we saw 2023 and 2024 the situation in titanium white is a bit different. The introduction of custom duties on Chinese products, imports of Chinese products translated into higher spreads between feedstock prices and product prices and the upward trend has been reported until the first quarter of 2025. This was very stable. However, the increase of the spread was seen in the second quarter of 2025 after we let go of the stocks brought to Europe still in 2024.

Now the market situation in the plastics industry low spread since the first quarter '23 has continued ever since a slight increase in the probability of this business and the spread between the raw materials in the second quarter of 2025, mostly attributable to the slower -- fast decrease in prices of raw materials and lower price adjustment of end products. For raw materials, the decrease was stronger in Europe than in Asia, which increased profitability in Europe on sales of polyamide 6. From semi-finished products perspective, caprolactam at very similar levels. And as I mentioned, this decrease in the European market polyamide 6 versus raw material of benzene that was lower at 23% versus 47% in the decrease of benzane prices. And the results in the Plastics segment were mostly influenced by the effect of Azoty Polyolefins.

Now the financial performance, we are about to present for the first 6 months, is consistent with our estimates published a few days ago. Azoty Group delivered PLN 3.3 billion revenues, and that was comparable to the second quarter of 2024. We had somewhat lower revenues in Chemicals and Energy and higher revenues in our key segment that is Agro. We reduced our EBITDA losses from minus PLN 128 million to minus PLN 71 million and these results are strongly influenced by the loss of our daughter company, Azoty Polyolefins. Without that item, the group's EBITDA would have been positive at the level of PLN 73 million compared to the comparable figure in the year before -- sorry, in the year before, there will be minus PLN 113 million. Revenues for the first 6 months compared to the last year went up by 6% to [ PLN 7,139 million ]. So that's comparable to the first quarter of 2023.

At the same time, we improved our EBITDA in the first quarter, it's group-wide including Polyolefins, EBITDA is negative, minus PLN 79 million. And again, if we adjust this by excluding Polyolefins, then our core business delivered a positive EBITDA of PLN 160 million. In the first half of the year, our EBITDA went up by PLN 100 million compared to a similar period in the year before and that's attributable to our restructuring efforts mostly on the cost side. And we started that initiative in March 2024. We can see the actual impact of our cost-cutting measures and these remedies have been delivering consistent EBITDA growth quarter after quarter. However, despite the strong negative impact of imported fertilizers from the East, in the first quarter of 2025, we sold more fertilizers compared to the similar period one year earlier. However, we struggled with growing gas prices. Our fixed costs in the first quarter of -- in the first 6 months of 2025 considered comparatively year-on-year in a normalized way is lower by PLN 93 million, mostly in terms of labor, which reflects lower employment across the group.

Also, we terminated all our sponsoring and PR agreements, which reduced our other costs by time. We have lower material and repair costs, and that's attributable to the improved performance of our renovation companies. Depreciation costs included in the Polyolefins business was PLN 123 million. In the first half of the year, the raw material situation of the group was strongly affected by the growing natural gas prices. They were 43% higher than in the similar period of 2024. Per unit cost of coal consumption was definitely lower.

The total cost of raw material was PLN 185 million higher than the year before and PLN 590 million in gas alone. We had lower cost of oil derivatives, PLN 276 million less for phenol and propane and we had lower fossil fuel costs. We also had lower coal consumption. We used less coal and prices were lower as well. In the first quarter, the share of gas in raw material was 41%, 12 percentage points more than in the year before. So it's been 18 months of intense demanding negotiations with financing institutions. We've been consistently implementing our remedy program in agreement with financing institutions. This program is monitored and updated if necessary. As a result of these negotiations, we have a green light to continue our stabilization agreement, which now terminates on the 30th of September. In mid-September, we received a waiver from financing institutions not to reach our debt-to-EBITDA ratios.

The solutions that we're currently working on are aimed at switching from the stage of technical agreements with financing institutions and those agreements sometimes continue for weeks or months. So we're going to switch from the technical stage to a long-term understanding. We regularly and timely pay our obligations or liabilities under those agreements and any other agreements with financing institutions. Financing institutions provide credit facilities, defer payments and the facilities we have secured financing for the Azoty Group. In the first 6 months of the year, we used PLN 234 million more credits and factoring facilities. In total, available funds at the end of June was PLN 1.3 billion. A vast majority of the leading companies within the group have improved the performance in the first half of the year compared with 2024.

For [ Pulawy ] EBITDA is at 0 level. In Police, it is 0 plus. However, you can see significant improvement over strongly negative figures last year.

For Police, it's important to note that the company is back on positive EBITDA track. [indiscernible] doubled its last year's EBITDA, it's still not satisfactory. But for Compo Expert, our EBITDA went up by 32% and the company consistently delivers a positive net result. However, we have Azoty Polyolefins, which still has a negative effect on the group, just a technical downtime and incomplete use of capacity as well as low demand for polypropylene, coupled with low spreads, attributable to macroeconomic situation. All of that caused the poor performance of Polyolefins.

In the Agri sector, we've seen improvement in 2 areas as growing sales volume and growing revenues. Sales volumes went up in all product categories, which allowed us to deliver positive EBITDA at the level of PLN 119 million in the first half of the year. That's plus PLN 193 million if we compare the first half of 2025 to the first half of 2024. And the key factor here was obviously growing import in the first half of the year, it still keeps us far from standard margins that we used to have in Europe, even though those margins are improving. And we have more intense import of products from outside Russia and Belarus. Importantly, from the group's perspective, we have some protective measures that reduce expansion into the Polish market, and those efforts will continue. EBITDA from the first half of the year was at the level of 2.5%, which is 4.3 percentage points more than in the first half of 2024.

In Chemicals, the group struggled with structural problems of the European market limited growth possibilities in terms of production volume and strong pressure caused by high gas and energy prices. As a result, the European market as a whole, this segment has been struggling with lower profitability for the last couple of quarters. And we've had shrinking sales and production volumes recorded by most European producers. In the Azoty Group, all figures in Chemicals went down with the exception of OXO alcohols. Across the sector, EBITDA has improved, but it's still negative at the level of minus PLN 82 million in the first half of 2025. But still, it's a major improvement over the previous year by PLN 71 million in 2024. In the first half, we have minus PLN 53 million.

In the Plastics segment, we saw a higher volume production, higher volume of sales in polyamide segment. However, in the polypropylene segment, there was a drop, which was mainly due to underutilization of production capacities [indiscernible] production facilities and also problems with maintaining a constant level of production. EBITDA for the first 6 months of the year was mainly driven by the impact of sales of polypropylene going down versus the level reported in 2024, which was at minus PLN 91 million, which represents a drop of nearly PLN 200 million year-on-year. The entire segment continued to be under the pressure of ever-growing imports of end products from Asian market.

We're talking about automotive market and the construction market, which were affected by higher imports of products from Asia and as a result, lower consumption of polyamides in the European market.

So we're talking about CapEx control tower, which analyzed in detail the entire investment portfolio across the group. And at the very beginning, the analysis of the portfolio was made in order to select objectively, select the key investments and CapEx projects from a number of angles, technical, legal market and business angle as well as regulatory angle because we need to remember that this analysis needed to be comprehensive. And based on that, we analyzed the effect for the entire group at the group level. We are continuing this process. So as by the end of the year, we will have a brand-new CapEx management model.

As I said at the beginning, CapEx spending was limited to the minimum necessary level. So we are keeping key investments, which are of major importance for the group's business. Let me remind you that we have 4 major investments across the group to [indiscernible]. And I believe that in terms of the CapEx figure, the major one is the construction of a whole based unit [indiscernible]. Right now, we are performing the stocking and inventory take, and we are analyzing the major elements of this investment in order to finalize it after the contract was terminated due to the fault on the side of the general contractor that is Mostostal.

As far as Polimery Police is concerned, 3 major areas in terms of this company and the project. First of all, a stabilization agreement with the banks was extended until September 30, 2025. We are in touch with our financing institutions in order to make sure that the process -- extension process for the stabilization agreement is ongoing. Secondly, we are working with one of the shareholders, ORLEN, as far as MOU is concerned, the memorandum of understanding was signed and then extended by an annex to include potentially the takeover of not only our port-based assets, but also all or part of the shares, acquisition of all or part of the shares which are held by Grupa Azoty and Grupa Azoty Police. And thirdly the relationship with the digital contractor, the termination of the agreement, contractual penalties and also the payment of guarantee and the effects for the company taking the next steps as part of the Polimery Police project.

First of all, we have prepared an end-to-end plan for the completion of this project and relaunch of this installation. And according to this plan, the funds or the resources that we received under the guarantee payment for the proper performance of the agreement will be used to finalize these investments. Right now, we are negotiating the agreement with the financing institutions on how to use the funds under this guarantee. And we will move on to complete the project and relaunch the unit.

It's a wrap-up of the presentation, and we can now move on to the Q&A session. First question, where will we see the effect of the imposition of custom duties on the imports of fertilizers?

Well, first of all, as Grupa Azoty Group, we are very grateful to the European Commission, but also to the Polish NPs, who have supported the measures taken by Polish fertilizer producers, and we're also very active in the legislation process in order to impose additional duties on imported products from Russia and Ukraine. And we see the first effect of lower imports. We saw them in the months of July and August. However, what we presented shows that after the very strong period of -- we are after the very strong period. So we will see -- in terms of the stock levels, we will see the effect in the fourth quarter of 2025 or the first quarter of 2026 in terms of the first measurable effect for European producers.

Second question, can you tell us a little bit more about your plans in the defense sector? A question to Mr. Bielski.

Yes, we are consistently keeping our interest in these projects. We are taking steps to be present. We are in touch with the suppliers. We are negotiating it. We are defining our plans, but we have also launched first tenders. On the other hand, we need to secure the financing. As we said before, we have applied to [ FIC ] and this application is now being analyzed. We are keeping our fingers crossed that we will be ready to launch the investments shortly.

Moving back to fertilizers. What are the prospects for the spreads in the Agro segment in the quarters to come?

As we look at nitrogen-based fertilizer prices, they are stable, especially in Europe. What can be seen as a transitory period in terms of gas prices, winter in fourth quarter is when we can expect the correction of gas prices. But our stocks gas levels in Poland and across Europe are high, storage facilities are filled up to the brim or almost filled up. So the demand can be limited, the effect can be limited as well. So we can expect the spreads this year to be stable this year and the upward trend can only be seen in 2026 as a result probably of the imposition of customs duties on the fertilizer products from Russia and Belarus.

In terms of compound fertilizers, the situation is a little bit different because the sulfur prices as well as potassium chloride prices have an effect there. So the spread went down a little bit in the second quarter of 2025. And I believe that the decrease or stabilization of the spread can be expected in the quarters to come. I'm talking about the fourth and the third quarter of 2025 for compound fertilizers.

What are the savings generated by the Azoty business program? Are you satisfied with this program and its implementation?

We have talked about the effects of this program already today especially in terms of costs by type going down by PLN 93 million, which was mainly due to the implementation of the Grupa Azoty, new Azoty business product, where we cut our costs. However, the structural approach to cost savings, cost reduction and improvement of our efficiency has another dimension because our goal is to resume the measures we are taking to consolidate the group and to share best experiences and best practices across the group. So this is an additional goal. In addition to reduction of cost and improvement of our efficiency, this is yet another major objective of this program.

What are -- what's the level or the climate in terms of negotiations with the banks? Are they difficult? Or are they promising?

Well, those negotiations are always difficult, yes. Let me put it straightforwardly here. These negotiations are difficult. We have been discussing it for many months. All sites of these negotiations -- all parties involved in these negotiations must present, motivate and defend their interests. Grupa Azoty has taken out a significant debt level which is mismatched with our business and financial capacities over long term. So this is why those negotiations are so challenging.

We need to analyze a lot of versions and options with the financing institutions, a lot of models based on the prospects for our business for the future. We need to consider regulatory issues. We need to consider our capacities, but also the macro environment and our market environment in the global -- at the global level as well. So this is very difficult. And in terms of our internal discussions or the prospects of our business in Europe and in this part of the world, we see it as well. When we are discussing it with the financing institutions, we are also verifying our approach we took a couple of years ago and I'm not talking about only our approach, but the approach taken by a lot of businesses, it needs to be verified because it dates back to years, years ago.

So we are sharing these takeaways with the financing institutions. This is why those negotiations are challenging, and they are really difficult. But you asked whether the financing institutions are ready and willing to be helpful. Well, this would mean that they are actually ready to take compromise and meet us halfway. And I believe that's concerning the future interest of the group and potentially a client of the financing institutions. This must be taken into account.

A question on PDH plant. Has the effect been removed? When will it resume?

Well, when we look at PDH and PP, we assumed that the renovation will take 3 years, and this is what we aimed at. After we resumed the plant's operation, we noticed that the first interval will be shorter than 3 years. So after 2 years, PDH plan had to stop that was in July 2025, and the company has a plan to repair the plant and to finish [indiscernible] project. So we secured financing for that project by using the good workmanship bond from a [ general ] contractor. Importantly, PDH when it has a downtime, the whole bond can keep working, so that's propane terminal and PP plant so if the market situation in polypropylene improves and the company will be able to resume PP production without PDH.

So we will shorten the manufacturing chain. Anyways, we are now preparing for PDH renovation and the whole planning process is now over, cost estimate is also complete. So right now, all we have to do is to negotiate with financing institutions on how to use the good workmanship bond, which is in our account.

Next question. What is the current status of talks with ORLEN on the sales of your stock in polyolefins and when some outcome can be expected?

Last night, we just signed an annex to this agreement. So it's a very recent development. We're working hard on possible scenarios, and we hope that both parties without undue delay will continue talks over the next week or two. And whose initiative was it to sign a new annex, that's the effect of bilateral analysis. We constantly analyzed and modeled the group's forecasts, and we also look at alternative ways to use our assets, including our ports.

So that's a bilateral effort and perhaps it's going to be a fresh look, a fresh perspective on the assets held by Polimery Police.

And the last question, financial question again, why is your debt growing quarter-on-quarter, taking into account leasing despite strong CV growth.

Well, the growing debt is directly caused by the fact that cash flows were worse in the first quarter -- sorry, in the second quarter. In the second quarter, we had a lot of expenses on renovation projects, preparing the plants for the new season. And also, we have some renovation downtime.

[indiscernible] question, professor Skolmowski will give us the prospects for a few months to come.

Well, we've been consistently driving our Azoty business project. In a structural perspective, this includes all measures aimed at long-term performance improvement in Azoty Group. We are happy to see improved performance in Kedzierzyn. And we are very close to positive 0 in [ Pulawy ]. We have positive EBITDA in Compo Expert. However, we frankly say, as we've always had in the past, we need to be back on the track of positive EBITDA. This is our objective for the quarters to come. This is why we are very serious about the situation in the Agro sector. As we said, the duties, the custom duties will not change the situation overnight.

Warehouses are full of Russian and Belarusian fertilized and it's going to take months for these warehouses to empty. However, we've seen some first symptoms that give us more optimism about Agro. And Agro represents a fast majority of our core business. We've been repairing and solving the problem of Polimery Police. This is why we have consistently presented solutions that may provide a multifaceted response to that challenge.

We have just signed an annex to the MOU with ORLEN and who -- we are also talking to financial institutions and this is a multilateral discussion, and it has to be multilateral because a solution that solves the problem has to be accepted by many of the stakeholders. We've been talking to financing institutions. We are frank and open in our communication. We present our results regularly. We discussed the outputs, the results of Azoty business. Looking at many scenarios that could solve the problem of restructuring our debt.

We hope that these negotiations will take us to a place where we will be able to finalize them in the last additional factors of this year. The solution is proposed in the course of these negotiations and the counter proposals looking at many other additional factors will eventually work out a compromise.

We will be consistently pursuing our goals and these goals include getting the group back on the growth track, the growth track of positive results and market environment is not easy. The European chemical industry is struggling, which includes our direct competitors. On top of that, our investment program weighs heavily on us. On top of that, we have another expensive project namely [ Pulawy HCP ].

This motivates us to work harder to improve performance with the help of our staff who are involved in the repair program and in searching for new initiatives that will respond to the problem that the group has been facing for years, namely deeper consolidation of many processes and reorganizing these processes segment by segment. We have some tough negotiations ahead of us at the group level and the project company level. However, we are sure that agreements will be reached in both of these processes.

Thank you very much, and please take an in-depth look at our results and ask questions, if necessary. And now I will be available on the chat facility today and looking forward to see you at the next earnings call.

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