Profitability of Poland's ZAP rises after urea expansion – Erste

02 March 2012 16:16  [Source: ICIS news]

LONDON (ICIS)--The profitability of Poland's Zaklady Azotowe Pulawy (ZAP) has improved because of strong sales of the company's expanded technical urea production, Erste Group Bank said on Friday.

ZAP, which saw its net profit for its fiscal 2011/12 second quarter ending on 31 December come in at zlotych (Zl) 136m ($44.2m, €33.2m) compared with Zl 17.1m a year ago, was boosted by a net profit contribution to the quarter from technical urea of Zl 82m, a near-threefold improvement year on year, noted Erste.

The urea contribution approached half of the overall chemical division contribution of Zl 188m, which itself was slightly more than seven times what was recorded for the fiscal 2010/11 second quarter, the bank added.

In April last year, ZAP boosted its urea capacity by 270,000 tonnes/year to 1.2m tonnes/year, expanding its EU capacity share as Europe's second-biggest urea producer behind Yara to 12% from 9%.

ZAP also had a 54% year-on-year increase in revenues to Zl 996.2m, mainly thanks to strong revenue growth in its agro division, said Erste.

The agro division's revenue rose by 67% to Zl 606m, with its sales volumes rising by 34% to 585,000 tonnes.

The fact that there has been no new gas tariff hike in recent months, and also an improving fertilizer price relation versus grains, should result in ZAP posting very strong profits for the third fiscal quarter of 2011/12, Erste added.

“Nevertheless [it should be remembered that] each 10% hike in the gas price means around Zl 100m in additional costs for ZAP,” the bank said.

($1 = €0.75, $1 = Zl 3.08, €1 = Zl 4.10)


By: Will Conroy
+44 20 8652 3214



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