Raiffeisen Centrobank downgrades Ciech rating from ‘buy’ to ‘hold’

29 March 2011 16:24  [Source: ICIS news]

PRAGUE (ICIS)--Raiffeisen Centrobank has downgraded its rating of Poland’s Ciech from “buy” to “hold”, citing cost pressures in the company’s soda ash and organic chemical businesses, the bank said on Tuesday.

“We believe that hikes of soda ash contract prices are already reflected in the share price and we see no further scope for a positive surprise in the first half of 2011, as the cost pressures, especially in the organic business, but also to a smaller extent in the soda business, may largely offset higher soda product sales,” Raiffeisen said.

The first half of the year should see Ciech’s soda ash prices grow by nearly 10% year on year, with a similar increase in sales volumes, but this information had already been priced in by the market, Raiffeisen analyst Dominik Niszcz said.

Ciech’s organic chemical division faced declining prices of toluene di-isocyanate (TDI) “and flat, or only slightly growing, contract prices of other chemicals, coupled with growing prices of oil and, as a result, of oil derivatives purchased by Ciech”, he added.

On the positive side, Niszcz noted that Ciech was now enjoying a “less-risky profile”.

This was a result of its zlotych (Zl) 441.6m ($155.5m, €110.4m) capital increase, long-term refinancing agreement with a consortium of banks and the raising of capital from disposals.

($1 = Zl 2.84, €1 = Zl 4.00)

Please visit Will Beacham’s Look East for Chemicals blog

By: Will Conroy
+44 20 8652 3214

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