WARSAW - Grupa Azoty, Poland' largest chemicals maker, posted a bigger than expected 65 percent drop in second-quarter net profit, hit by an impairment related to African assets as well as a slump in fertiliser prices.
The state-run group reported net profit of 44 million zlotys ($11.54 million) on sales down 5 percent year on year at 2.2 billion zlotys. Analysts had expected a net profit of 117 million zlotys on sales of 2.05 billion zlotys.
"The main surprise is in the fertiliser segment. Commodity prices fell significantly, but the product prices surprised even more, which results in shrinking margins. The company has been hit by the situation on global markets," said Raiffeisen Centrobank equities analyst Dominik Niszcz.
Grupa Azoty said that the downward trend in urea prices, observed since the end of April, continued until the end of June.
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"The long-term downtrend in fertiliser prices, continuing for several years, also follows from the lower than expected demand in China and India, which -- as the agricultural industry experts believe -- will translate into declines in nitrate fertiliser prices in Europe," Azoty also said.
Analysts said they would expect a negative market reaction.
Shares in Azoty have fallen by 33 percent since the start of the year.
