Press releases

Press release - Warsaw, May 15th, 2008

Consolidated net profit of the Ciech Chemical Group in Q1 2008 amounted to PLN 97.9 million. This translates to a 43.9% achievement of the financial forecast for 2008 after the first three months. The consolidated sales income amounted to PLN 1032.1 million, which accounts for 24.2% of the 2008 forecast.

Increase in sales and operating result

Compared to Q1 in the previous year, the Group income has grown by 12.2%. (Last year it amounted to PLN 919.7 million). The consolidated net profit was lower by 19.7% compared to the adjusted* net profit in Q1 2007, amounting to PLN 121.9 million.
The acquisition of the German company Sodawerk Stassurt at the end of 2007, and the increase in prices of specific products, with a simultaneous high level of sales, had the greatest impact on the increase in the Ciech Chemical Group income. The prices of soda ash obtained are 6-7% higher compared to last year, and the prices of the phosphatic and multi-component fertilisers have also increased significantly. A slight decrease in the prices of organic products, such as TDI, ECH and epoxy resins, has been observed on selected markets.
The operating profit (EBIT) has gone up by 7.2% from PLN 147.4 million to PLN 158 million, and the EBITDA dynamics (operating profit gross of depreciation costs) amounted to 9.6% (an increase from PLN 192.3 million to PLN 210.8 million).

Unthreatened forecast

The net result for Q1 was significantly influenced by financial costs (interest on loans and bonds and exchange differences), as well as taxes (once). In total, the costs amounted to approx. PLN 26 million. Currently, approx. 50% of sales of the Ciech Chemical Group take place abroad, which lowers margins implemented, taking into account the current EURO and USD exchange rates, which are lower than the exchange rates assumed in the financial plan, despite an actively implemented hedge policy.
However, in the opinion of the Management Board of Ciech SA, achievement of the financial forecast for 2008, assuming sales income amounting to PLN 4 270 000 000 and net profit amounting to PLN 225 000 000, is not at risk.

Perspectives for subsequent quarters

Taking advantage of the sustained upturn in trade in chemical products, Ciech and the Group companies are implementing large-scale investments aimed at enhancing their capacity and reducing costs. Results of such investments, being further increase in sales income and a noticeable profit improvement, will be observed in 2009.
As regards the Organic Division composed of Zachem from Bydgoszcz and Organika-Sarzyna from Podkarpacie, works connected with the expansion of the foam and polyester systems will be completed this year. With regard to the German company Sodawerk Stassurt, an investment programme related to the expansion of capacity to 600 thousand tonnes of soda a year will be completed at the end of August or the beginning of September. The Romanian USG Govora will also be systematically increasing their production volume to 410 thousand tonnes a year in February 2009. The target level in the production of soda at the Ciech Chemical Group will be 2.4 million tonnes in 2010, compared to the present 1.9 million.

* The report drawn up for Q1 2007 disclosed net profit amounting to PLN 130.9 million. The current adjustment results from the allocation of the costs of purchase of ZCh Zachem, ZCh Organika-Sarzyna and USG Govora.