Flat prices, rising feedstock costs pressuring Poland's ZAT - bank

18 February 2013 13:01  [Source: ICIS news]

LONDON (ICIS)--Polish chemical group Zaklady Azoty Tarnow (ZAT) is under pressure from a combination of flat product prices and rising feedstock costs, an investment bank said on Monday.

“Despite the flat end-product prices, the benchmark prices for benzene, propylene and methanol rallied 8%, 7% and 11%, respectively, month on month in Polish zloty terms in January, signalling that the first quarter of this year may be another quarter of cash-burning in ZAT's chemicals segment,” said WOOD & Company analyst Piotr Drozd in a note to investors.

“January’s input cost increases are likely to hurt the Q1 2013 margins, adding to the Q4 2012 headwinds,” he added.

Incorporating the price hikes into the bank's ZAT forecasting model, Drozd trimmed the 2013 net profit estimate by 2% to zloty (Zl) 455.5m ($145.1m, €108.7m).

At Monday's close of trade on the Warsaw Stock Exchange, ZAT is to be listed on the Morgan Stanley Capital International (MSCI) Poland and MSCI Emerging Europe indexes.

Given the difficult chemicals operating environment, owners of ZAT shares should see the listing as a chance to take profit as the ZAT share price was currently “pricey”, Drozd said.

The ZAT group produces nitrogen, phosphorous and multi-component fertilizers, melamine, caprolactam (capro), polyamide 6, titanium dioxide (TiO2) and oxo-alcohols.

($1 = €0.75, $1 = Zl 3.14, €1 = Zl 4.19)


By: Will Conroy
+44 20 8652 3214



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