Business strategy
With the Group’s stable financial position, we can afford a realistic approach to strategic matters, while constantly working to improve our competitiveness in the coming years.
With the Group’s stable financial position, we can afford a realistic approach to strategic matters, while constantly working to improve our competitiveness in the coming years. We consistently pursued the Grupa Azoty Group’s Growth Strategy for 2014–2020.
Our goal is to build the fully-integrated Grupa Azoty Group, improving the attractiveness of its product portfolio, relying on optimised processes, and implementing innovative solutions.
Strategic financial targets of the Grupa Azoty Group
Four strategic areas:
At the Grupa Azoty Group, we perceive cooperation as a source of benefits. Effective operation on the competitive global chemical market requires joint effort of our key companies. Because we want to strengthen these working ties, in 2018 Grupa Azoty of Tarnów, Grupa Azoty Police, Grupa Azoty Puławy and Grupa Azoty Kędzierzyn signed a cooperation agreement, which allows the Group to leverage synergies and further build its position through integrated sales management. The agreement enables the companies to trade as a single business entity, with key divisions managed by managers from across Poland, regardless of their company’s headquarters. With regard to strategic feedstock procurement, there is a centralised supplier selection and price negotiation process in most cases, with economies of scale leveraged to secure competitive prices and multi-million savings.
How we consolidate our plants
One benefit of a single procurement platform is lower prices of raw materials; the consolidation of purchasing activities generated approximately PLN 465m in savings*
Production and maintenance synergies led to PLN 170m in savings.
The optimisation of logistics (including the railway car fleet) produced savings of PLN 69m across the Group.
We believe that the consolidation of the Grupa Azoty Group, launched in 2013, offers a potential for further efficiencies. In order to manage the Group more effectively, we intend to implement a system of management by business segments. Until 2020, the Grupa Azoty Group will continue to integrate its processes and to further consolidate:
- Fertilizer sales,
- Procurement,
- Logistics,
- Finance,
- IT,
- The energy segment, and more.
We are optimising non-current asset management, seeking to harmonise our planning and production processes, and aligning our operational performance and cost efficiency reporting process across the Group. We are launching a platform to exchange information on R&D projects, which is expected to eliminate overlapping activities carried out by different companies and to support sharing of outcomes of individual initiatives, thus maximising synergies.
We want to further reinforce our already strong position on the domestic and regional fertilizer market. We are aware that this requires us to adjust fertilizer formulations as much as possible to the needs of the contemporary agriculture. The efforts will mainly focus on tailoring our product portfolio to the needs of large-scale farms, while maintaining a strong position among small farmers.
We aim to develop specialty products: granulated and liquid fertilizers dedicated to specific crops and specific customers. We plan to add customised fertilizer lines to our fertilizer portfolio in order to respond to the needs of a specific customer or even a specific crop.
Additionally, we place a strong emphasis on innovative IT systems for farmers, rapid agricultural analysis, and technologies that promote precise fertilization. We are developing services in the field of specialised agriculture based on satellite maps, drones and state-of-the-art technologies. We look for solutions in start-up communities or in sectoral programmes, such as BIOSTRATEG and its continuation INNOBIO. One of our key services is SatAgro.
In order to secure the distribution of our fertilizers, we intend to gain more control over the domestic and international sales channels for agro-products. Fertilizer sale processes will be consolidated in order to simplify and streamline the relationships between the Grupa Azoty Group and its key customers. We are also improving the effectiveness of our production activities and the energy efficiency of our technologies.
We seek to diversify our revenues and become less dependent on business cycles in agriculture. To this end, we are increasing our exposure to areas unrelated to fertilizer production. Petrochemicals and plastics are our key directions. We focus on the production of higher-margin products.
We are integrating and extending the plastics product chain. The new unit in Tarnów will allow us to produce polyamides and their derivatives which offer a higher market potential, instead of restricting ourselves to caprolactam - a direct, unprocessed intermediate. We are also developing our product portfolio relying on advanced PA 6-based polymers.
Our flagship diversification project is Polimery Police. The new plant being built in Police will produce propylene and polypropylene – plastics used in a wide range of industries. The project will allow us to increase our production capacities for the most promising substances in the plastics segment. The construction site is located in a special economic zone, next to Zakłady Chemiczne Police.
In the OXO segment, we are adding non-phthalate, organic and specialty plasticisers to our product portfolio.
Oxoviflex – production of the first Polish non-phthalate plasticiser
We are among Europe’s three largest manufacturers of non-phthalate plasticisers. Oxoviflex, our flagship product, is the first Polish non-phthalate plasticiser, which – in the vast majority of cases – can successfully replace its phthalate counterparts that are far more hazardous for people and the environment.
Plasticisers are used to make PVC and PVC-based products elastic and flexible. Further processing of the plastic would be virtually impossible without them. Oxoviflex is one of the most advanced plasticisers. It is not subject to any legal or application restrictions and is safe.
Oxoviflex, manufactured at our Kędzierzyn plant, can be easily used to make a complete range of PVC products, including carpets, vinyl wallpaper, flexible pipes, cable insulation and sheathing, artificial leather, film and packaging. In contrast to phthalate plasticisers, it can also be used in the manufacture of food contact products and toys.
Oxoviflex is an oily, colourless or straw-coloured liquid, free from any mechanical impurities. Annual output: approximately 65,000 tonnes..
We are building a coal gasification plant which will allow us to use domestic hard coal resources for the production of ammonia and methanol while reducing additional consumption of natural gas. The project will support the diversification of ammonia sources and development of our product offering based on methanol.
With our unique proprietary expertise in agro-products, the Grupa Azoty Group will become an active participant in research, development and innovation projects in Poland. We have established two R&D and innovation centres, in Tarnów and Kędzierzyn. We cooperate with start-ups and support their acceleration, with Idea4Azoty being our key project in this area. We develop cooperation with business and science communities. We want to actively participate in open innovation initiatives.
Our ideas and products will be in line with key economic trends based on sustainable development, including the circular economy. We are preparing to implement a project involving commercial production of graphene and to engage in 3D printing.
Six specific strategies
Product strategy, innovation strategy, operational excellence strategy, financial strategy, and corporate management strategy.
We aim for specific outcomes:
- Improvement of organisational and production efficiency and ensuring business agility,
- Security in terms of supply of strategic raw materials and finance,
- Increased share of higher-margin products, achieved by extending our product chains in the chemicals and plastics segments,
- Adaptation of our fertilizer range to the needs of innovative agriculture by providing all-in-all solutions – services based on state-of-the-art technologies and fertilizer products dedicated to specific crops and customers,
- Entry into new business areas.
Our operating priorities: high quality, care for technical safety and the environment, process safety and energy efficiency improvement are all efficiently monitored and facilitate effective management of the companies. The Integrated Management System is structured around the following principles: giving priority to customers, reducing environmental losses and mitigating the risk of hazards, and working on continuous improvement.
Long-term investment programme
We are pursuing an investment programme that will help us consolidate our position as the leader of Poland’s chemicals market. It provides for diversifying and upgrading our operations, focusing on the most profitable activities, and enhancing our resilience to business cycles.
Under the programme, the Grupa Azoty Group plans to carry out investment projects at all its key companies. Importantly, the scale of our ventures often makes them the largest projects implemented in a given city, town, county or province.
We believe that in order to grow we need to invest in the future of our Group, and innovation is the best option we can choose. For many years now, we have been working with start-ups, including by implementing smart applications for agriculture or 3D printing solutions.
Grupa Azoty Group’s investment projects:
Tarnów:
- Mechanical granulation unit
- Polyamide plant II
- Research and Development Centre
The projects implemented in Tarnów are expected to increase our processing capacities where the strongest growth in demand is anticipated, e.g. in the sector of packaging, plastic film and modified plastics, such as plastics with fibreglass, dyes and quality-improving additives.
Police:
- Polimery Police – a polymer production plant valued at PLN 5bn, a project of strategic importance not only for the Group, but also for the entire national economy.
Puławy:
- Production line of the nitrate fertilizer mechanical granulation unit
- Planned construction of a new nitric acid production unit and upgrade of the four existing units
By 2021, Grupa Azoty Puławy plans to invest more than PLN 1bn in the nitrate fertilizers area.
Kędzierzyn-Koźle
- Unit for the production of specialty esters used in the manufacturing of plasticisers
- Research and Development Centre
Structure of the Grupa Azoty Group’s capital expenditure in 2018
In 2018, there was a slight change in the capex structure. The following expenditure was incurred:
- Growth capex: PLN 630.591m (up by approx. 17% y/y)
- Maintenance capex: PLN 180.931m (down by approx. 6% y/y)
- Mandatory capex: PLN 42.095m (down by over 50% y/y)
- Purchase of finished goods: PLN 52.108m (up by approx. 11% y/y)
- Other (components, major repairs, other): PLN 201.140m (up by over 28% y/y)
The Corporate Investment Project Supervision Department is a new unit at Grupa Azoty.
In 2018, we established a new unit at our organisation – the Corporate Investment Project Supervision Department. It was created to better supervise investment projects across the Grupa Azoty Group, and its main responsibility is practical implementation of projects approved by the Management Board or Supervisory Board. The principal duty of the Corporate Investment Project Supervision Department employees is to ensure that each project implemented by the Grupa Azoty Group is completed in time and on budget. In 2018, the key projects included upgrade of the dual-pressure acid unit and construction of the Research and Development Centre. The Department has several dozen staff, mainly project managers and inspection officers.
Innovation is now one of the main growth drivers for our organisation at the level of the Group as a whole as well as at individual companies. We want to be not only a beneficiary but also an active participant of the initiatives being implemented in Poland. Our ultimate goal is to lead the way and break new ground in innovation.
To maximise the potential benefits, the R&D&I activities of the Grupa Azoty Group will be operationalised in order to establish appropriate structures, procedures, principles and best practices, which will be coordinated at the Group level.
This initiative will be supported through further development of the existing research and development centres, establishment of new units, and building product specialisations. Our strategy will focus on driving innovation to extend the value chain with high-margin, low-tonnage specialty products, adapting new technologies to our needs, and refining existing processes.
We want to actively participate in open innovation initiatives, also by working with promising start-ups (through commercial contracts and/or equity participation), implementing corporate social responsibility projects, and engaging with local communities.
Learn about projects implemented by our companies
Grupa Azoty
With its own research facilities, Grupa Azoty can easily improve its technologies, thereby upgrading the quality of its products. Recognising the need for constant search for the most advanced technological solutions, the company has become a valued and sought-after initiator and active participant of innovative research programmes conducted by leading Polish scientific institutions.
| Grupa Azoty cooperates with such institutions as: |
|---|
| Akademia Górniczo-Hutnicza (AGH University of Science and Technology) |
| Centrum Badań Molekularnych i Makromolekularnych PAN w Łodzi (Centre of Molecular and Macromolecular Studies, Polish Academy of Sciences in Łódź) |
| Instytut Chemii Organicznej PAN w Warszawie (Institute of Organic Chemistry, Polish Academy of Sciences in Warsaw) |
| Instytut Chemii Przemysłowej w Warszawie (Industrial Chemistry Research Institute in Warsaw) |
| Instytut Nawozów Sztucznych w Puławach (Fertilizer Research Institute of Puławy) |
| Naczelna Organizacja Techniczna NOT (Polish Federation of Engineering Associations NOT) |
| Politechnika Krakowska (Cracow University of Technology) |
| Politechnika Warszawska (Warsaw University of Technology) |
| Politechnika Wrocławska (Wrocław University of Technology) |
| Stowarzyszenie Elektryków Polskich (Association of Polish Electrical Engineers) |
| Stowarzyszenie Inżynierów i Techników Przemysłu Chemicznego (Polish Association of Chemical Engineers) |
| Uniwersytet Rolniczy w Krakowie (University of Agriculture in Krakow) and ICSO Blachownia in Kędzierzyn-Koźle |
| Wyższa Szkoła Biznesu – National-Louis University |
Grupa Azoty is perceived as a trusted and experienced partner for technology projects carried out globally, and a reliable European provider of established patents and licences that set new industry standards thanks to the company’s top-qualified technical staff.
MORE ABOUT THE R&D CENTRE PROJECT IN TARNÓW
Grupa Azoty Puławy
In January 2018, we announced a tender for the construction of a new coal-fired power generation unit, breaking ground for the Grupa Azoty Group’s largest energy project and also the largest project in the Lublin Province. The 100 MW project, valued at approximately PLN 890m, will be built on the premises of Grupa Azoty Puławy’s CHP plant and is scheduled to be placed in regular operation by the end of 2021.
The new coal-fired unit will be built on the premises of the company’s CHP plant, with which it will be closely integrated. The project will meet all EU environmental standards in line with the BAT Conclusions. It will have an integrated SCR system for nitrogen oxide reduction and is also to be equipped with an FGD system.
11 contractors from Poland, other European and non-European countries submitted their bids. A consortium of Polish companies comprising Polimex Mostostal S.A., Polimex – Energetyka Sp. z o.o. and SBB Energy S.A. was selected in the tender procedure as the general contractor for the project.
Grupa Azoty Puławy’s areas of innovation:
- Developing the fertilizer portfolio by adding advanced products and application methods,
- Biotechnology projects implemented with the support of the New Chemical Syntheses Institute in Puławy – use of plant material and development of sustainable products,
- Advanced products for the chemical industry obtained from existing products and intermediates (melamine, caprolactam),
- Optimising the production process efficiency by means of systemic and technological solutions.
BEST PRACTICE
First production line of the nitrate mechanical granulation unit
Construction of a production line of the nitrate mechanical granulation unit with a daily capacity of 1,200 tonnes of ammonium nitrate or 1,400 tonnes of calcium ammonium nitrate, together with logistics facilities: a seasoning hall with a storage capacity of 10,000 tonnes, a packing facility and a logistics hall. The project is complete with transport galleries, flyovers, electrical switchgears and road infrastructure.
Grupa Azoty Police
Fertilizers manufactured by Grupa Azoty Police include Polifoska Krzem with assimilable silicon, a large part of which is exported.
The fertilizer not only increases plants’ resistance to diseases and pests, but also to shortage of water or light, salt stress and phytotoxicity of heavy metals. As the list of permitted plant protection products becomes shorter year by year, the only way to protect crops from infections is often by stimulating their natural immunity. Silicon is responsible for developing plants’ defence mechanisms against adverse environmental factors. Fertilization is critical in agriculture intensive areas, where the content of silicon in soil is usually insufficient.
BEST PRACTICE
Overhaul of “the large unit” at the phosphoric acid department, which has increased its annual production capacity by about 5%, ensured more effective supervision of the production process, and brought annual savings of approximately 25,000 tonnes of phosphate rock. In addition, the upgrade of the gas pre-treatment system at the Nitro Business Unit reduced energy consumption and increased the possible ammonia output. Ammonia is manufactured at the Police plant mainly for the company’s own needs, and any excess volumes are exported. The upgrade will enhance the unit’s operational efficiency and will lower energy consumption by 20%.
Grupa Azoty Kędzierzyn
In 2016, Grupa Azoty Kędzierzyn obtained funding for two projects in the first INNOCHEM competition for innovative chemical industry ventures, run by the National Centre for Research and Development.
The purpose of the first project is to develop new physical forms of fertilizers or additives and slow-release fertilizer formulations containing micronutrients such as zinc, copper, manganese, boron, molybdenum and iron. According to the plan, the new generation of fertilizers will be launched in 2022.
The goal of the second project is to obtain an innovative fertilizer through a new biodegradable agent technology and a micronutrient combination method. The new product will address the agricultural producers’ needs related to the necessity to reduce nitrogen use, improvement of fertilizer performance through enhanced nutrient absorption, and reduction of the cost and time of fertilizer applications.
In 2018, Grupa Azoty Kędzierzyn completed modernisation of the biological part of its wastewater treatment plant. At present, the company has a state-of-the-art facility that meets the most stringent environmental protection standards. According to experts, the water discharged by ZAK to the Oder river is cleaner than the water abstracted from it for manufacturing purposes.
The key part of the modernisation project involved the installation of four giant blowers for wastewater aeration and the deployment of a technologically advanced system for wastewater heating. The modernisation cost more than ten million złoty.
