23 March 2006

Puławy Upholds Its Forecast

The Management Board of Zakłady Azotowe Puławy has upheld the Company’s financial forecast for 2005/2006, which assumes sales revenue of PLN 1.91bn and net profit of PLN 117m. The forecast has already factored in an increase in gas prices due to take effect as of April 1st 2006.

 The assessment of the feasibility of meeting the financial forecast was carried out based on the eight-month performance (from July 2005 to February 2006) and on the most recent assumptions concerning the remaining four months of the current financial year. Relative to the forecast released in September 2005, an adjustment has been made to the average annualised gas price growth (increase in 2005/2006 compared to 2004/2005) from 20% to 25.8%. Additionally, we have adjusted our assumptions concerning future exchange rates.
Marcin Buczkowski, President of ZA Puławy said: “Our forecast for the current financial year was very cautious. Although the average annualised gas price growth is higher than expected, the Company has managed to generate sufficient financial surplus. However, let me remind you that our revenue for the financial year 2004/2005 amounted to PLN 1.96bn, which translates into a net profit of PLN 202m.

In H1 2005/2006 alone, the results achieved by Zakłady Azotowe Puławy were well ahead of the forecasts, despite the fact that the first half of the year tends to be weaker. The Company succeeded in generating 51.4% of the total forecast revenue, 55.3% of EBIDTA and 52.7% of net profit.

 “Thanks to the agreement for ammonia water processing signed in November, the Company was able to generate incremental profits. Also the sales force of ZA Puławy has intensified its efforts, placing our products on new, attractive markets (melamine sold in the South American market being a case in point),” - explains President Buczkowski. “Taking into consideration the information about the better than expected eight-month performance, we feel confident to uphold our forecasts for the end of the current financial year”.

ZA Puławy operates on three key product markets:

• Fertilisers for the agricultural sector (urea, ammonium nitrate, urea-ammonium nitrate solution, ammonium sulphate) – leading Polish and global producer
• Melamine (used in the production of synthetic resin which is applied in the furniture, paint and varnish market, as well as textile and paper sectors) – third largest producer in the world, the only producer in Poland
• Caprolactam (used for the production of textile and industrial fibres, carpeting and engineering resins used in automotive, electronic and food industries) – one of the two producers in Poland.
  ZA Puławy is the largest company in the fertilisers and chemical sector in Poland and an important producer in the world. Approximately half of its revenue is derived from the exports.

For more information please contact:

Marek Sieprawski
ZA Puławy SA
tel. (+ 48 81) 887 62 01
msieprawski@azoty.pulawy.pl