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The new management board of Grupa Azoty announced that it had conducted asset impairment tests in the Tarnów-based company and its subsidiaries, which would reduce the group’s financial results for 2023.
— The results of impairment tests of fixed assets confirm that the current financial situation of the Azoty Group requires urgent repair. In this aspect, we pay great attention to the Polimery Police investment and the expenditure incurred on this project. In parallel We strive to commercially launch the investment as soon as possible and we are strengthening the team responsible for the implementation of this project – said Andrzej Skolmowski, vice-president of Grupa Azoty.
About the problems of the Polimery Police project, involving the construction of a polypropylene factory in Police, we wrote many times. The plant was grandly opened by PiS politicians in June 2023, but the investment has not been completed to date. The installation was supposed to start full commercial production in September, but so far the so-called integrity test, which is to confirm that the factory has achieved all parameters guaranteed by the contractor.
According to the company, in the case of tests conducted at Grupa Azoty in Tarnów for the plastics business, a deficiency in the estimated recoverable value of the assets was identified in relation to the book value, and therefore a decision was made to create an impairment loss in the amount of PLN 59 million. This is due to the projected deterioration in profitability due to weakening long-term market forecasts. The write-off will have a negative impact on the financial statements of the Azoty Group for 2023 by: a decrease in the standalone operating result by PLN 59 million. However, it will not translate into EBITDA (operating result plus depreciation).
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Another write-off, amounting to PLN 151 million, concerns the fertilizer business of the subsidiary GA Zakłady Chemiczne Police. It results from the deterioration of long-term market forecasts and future cash flow forecasts, in particular in the field of nitrogen products intended for technical applications.
Additionally, the company decided increase the write-off in the subsidiary GA Polyolefins by PLN 206 million to PLN 1,343 million. This company is responsible for building a plastics factory in Police.
Total after making all these write-offs last year’s operating result of the Azoty Group will be reduced by PLN 1,553 million.
