(Adds market reaction, analysts comment)
WARSAW (Thomson Financial) - Polish copper producer KGHM said first-quarter
net profit climbed six percent in first-quarter thanks to soaring copper prices
and higher sales volumes.
Unconsolidated net profit, which excludes earnings from KGHM's phone units,
rose to 982 million zlotys from 927 million a year earlier. That beat the 955
million-zloty average estimate of eight analysts polled by PAP newswire.
The stock fell 1.1 percent in early trades with analysts saying results were
"neutral" and prompted some investors to book profits amid weaker market
sentiment today.
"The results were broadly in line with expectations," KBC analyst Grzegorz
Litynski said. "We could see some profit-taking because the stock was going up
recently."
State-controlled KGHM benefited from a 31-percent rise in the average copper
price and a record jump in silver prices, although the strength of the zloty
currency against the dollar cancelled out large chunk of those gains.
Revenues jumped 14 percent to 3 billion zlotys. KGHM also cut down losses on
hedging contracts, which forced the company to sell copper below market prices,
to 75,000 zlotys from 244 million a year earlier.
KGHM, the copper miner with largest European output, also raised its sales
volumes of copper by more than two percent to 132,070 tonnes in the first
quarter.
Costs increased 12 percent because the company is spending more on wages for
its 18,250 workers and makes increased use of scrap metal in smelters to save
dwindling deposits before copper from deeper pits comes online next decade.
KGHM's new Chief Executive Miroslaw Krutin will discuss the results at a
news conference at 11:00 a.m. local time today.
Krutin said after his appointment last month he will to focus on investments
in new copper deposits and may review its 2008 forecast due to changes in copper
prices and currency fluctuations.
The company already made 34 percent of its 2.9 billion zlotys in net profit
planned for this year, ING analyst Andrzej Knigawka said. KGHM plans to have
11.2 billion in sales in 2008 as a whole.
Shares in KGHM have gained 10 percent in the last three months and
outperformed the blue-chip WIG20 index by eight percent.
piotr.skolimowski@thomsonreuters.com +48 22 447 24 36
ps1/ajb
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