23 December 2008 12:56 [Source: ICIS news]
PRAGUE (ICIS news)--Polish fertilizer producer Zaklady Chemiczne Police (ZChP) has written down the value of its inventory by zloty (Zl) 150m ($50.9m, €36.4m), the company said on Tuesday, blaming the international economic slump.
The figure was equivalent to one quarter of ZChP's inventory at the end of September.
The company, the second largest producer in Poland, also informed the markets that to the end of November its foreign exchange hedging transactions had caused a loss of Zl51.5m.
After digesting the new figures, investment bank Wood & Company said ZChP would now probably suffer a fourth quarter net loss that would reduce the Zl340m net profit recorded for the first three quarters of the year to a double-digit figure.
“For the fourth quarter we were expecting a Zl110m loss on the earnings before interest and tax (EBIT) line, which now looks way too optimistic as the loss could come in even twice as high - we maintain our 'Sell' on the stock,” concluded one of the bank's analysts Barbara Zaleska.
She added that with its announcement, ZchP - also a producer of titanium dioxide (TiO2) - had “re-qualified some of [the known] risks into certainty."
“In past years, ZChP has been used to re-assessing the value of its installations at the full-year end, using a discounted cashflow- type model which would certainly point now to lower valuation than a year ago as prices of fertilizers have dropped,” said Zaleska.
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