Q3 net profit at Poland's ZAT sinks 88.4% on thinner margins

15 November 2012 15:05  [Source: ICIS news]

LONDON (ICIS)--Third-quarter net profit at Zaklady Azoty Tarnow (ZAT) sank 88.4% year on year to zlotych (Zl) 11.6m ($3.5m, €2.8m) as chemical and fertilizer margins declined amid weak market demand, the Polish group said on Thursday.

Sales revenues climbed 29.1% to Zl 1.7bn from 1.3bn, comparing the third quarters of 2012 and 2011, ZAT added.

ZAT's net result was a “clear negative”, according to an analysis of the results by Piotr Drozd, an analyst at Prague-based investment bank WOOD & Company.

“As ZAT's revenues were in line with our expectations, the key reason for the miss was greater-than-anticipated margin pressure — a consolidated EBIT [earnings before interest and tax] margin of 1.2% versus our estimate of 6.8%,” Drozd said.

The company's plastics and oxo-alcohols businesses generated operating losses of Zl 11.1m and Zl 25.6m in the third quarter, respectively, against operating profits of Zl 77.5m and Zl 63.2m in the same period a year ago, the analyst noted.

“Oversupply of caprolactam [as an intermediary] in Q3, due to weak polyamide 6 [or nylon 6] demand, coupled with high benzene input prices, erased the product’s profitability in Q3,” Drozd added.

ZAT's fertilizer EBIT margin fell to 5.9% in the third quarter, compared to 8.4% in the previous quarter and 10.7% in the third quarter of 2011, Drozd's analysis also showed.

($1 = Zl 3.27, €1 = Zl 4.17)
($1 = €0.78)

By: Will Conroy
+44 20 8652 3214

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