Press releases

The consolidated sales revenue of the Ciech Chemical Group reached PLN 2,981.2 million after three quarters of 2008. Operating profit (EBIT) amounted to PLN 265.8 million and net profit to PLN 113.8 million.

Increased sales and gross sales profit in spite of crashing markets

After nine months of this year, sales revenues are 13.2% higher in comparison with the same period of 2007. EBIT fell by 3.9% and EBITDA (operating profit increased by depreciation costs) has risen by 3.6%, to 427.9 million. Net profit has fallen by 39.9%, while the gross sales result has risen by 4.9% following the first three quarters of this year, to PLN 673 million.  Unexpected changes on money markets, including fluctuating currency exchange rates (mainly due to the PLN weakening against the euro and dollar), have had a negative effect on Group’s results. The rise in raw materials and energy costs, as well as a weakening demand for plant protective agents, ECH, epoxy resins has also had a negative effect and the fall of fertiliser and TDI prices since September, too.  The polyurethane foam buyers’ deteriorating financial situation could also be noticed as a result of a weaker economic situation in the furniture and automotive industries. Furthermore, the fall of the operating profit originated from the worse performance of foreign companies, which form a part of the Soda Division. In case of US Govora, it was mainly caused by lower than planned production as a result of a major break down at the Romanian plant, and in case of the German company - a considerable rise in energy costs and also due to the date for the sale of the cavern moved forward.

Forecast verification for the Ciech Group

Unfavourable events, mainly due to the negative evaluation of deals entered into before mid August with the use of derivates, forced the company to verify the net profit forecast, which was announced 7 November. The new forecast for 2008 shows a net profit of PLN 88 million. Despite the reduction of planned net profit, business operations result should not become subject to any significant deviations. At the same time, the company has also maintained the forecast for sales revenue in the amount of PLN 4,270 million.

The outlook for upcoming months

There is a noticeable uncertainty regarding the macroeconomic conditions. Money markets fluctuations and the danger of a further reduction in prices and demand for main products as a result of the slowing economy increase the risk of carrying on a business. Nevertheless, company’s sound foundations at the operational level provide us with basis for optimism. The steady favourable economic situation in soda products should have a positive effect on the Ciech Chemical Group results. In addition, the effects of the increased soda manufacturing capacity at Sodawerk Stassfurt from September 2008 should also become noticeable as well as the growing stability in reference to the increased soda manufacturing volume at US Govora. In the long term, the planned debt restructuring and planned additional funding for investment and R&D projects from EU funds will bring about positive results. Furthermore, Ciech and Group’s companies will focus in the upcoming months on strict monitoring of investment spending and on effectiveness improvement programs.  Consequently, the effects of these actions will result in a reduction of operating costs and an increase in rotation of working capital.