27 April 2006

Full year in three quarters

Zakłady Azotowe Puławy has managed to earn the profits forecast for the whole financial year in just three quarters of the current financial year. As a result of these development, the ZAP Management Board has been able to revise the profit forecast upward.

 In the third quarter of the 2005/2006 year, the Company reported sales revenue of PLN 509m (PLN 1,490m in three quarters cumulative), pre-tax profit of PLN 63m (PLN 148m in three quarters cumulative) and net profit of PLN 52m (PLN 113m in three quarters cumulative). Thereby, the annual targets were achieved in the following proportions: 99.4% for operating profit, 100.3% for pre-tax profit, 96.9% for net profit and 91.8% of for EBITDA. Sales revenue exceeded the target for the three quarters of the year by over 4%.

Such performance was possible despite a considerable increase in  prices of energy resources, including natural gas which represents approximately 30% of the Company’s costs; the price of natural gas increased by 10.5% in the first quarter of 2006 as compared with the previous quarter. Another unfavourable trend was the strengthening of the złoty against to the euro, which is an important factor as ZAP is one of Poland’s largest exporters. The unusually severe winter this year was another negative factor which had an adverse effect on the Company’s results as the fertilisation activities could not be carried out in good time, which had a direct impact on demand at that time. Additionally, at the end of January, into February, gas supplies were limited due to the weather conditions. Despite these adverse conditions, Zakłady Azotowe Puławy may consider the third quarter a good one.

In the third quarter of the Company’s financial year, despite the sales revenue markedly lower than in the second quarter, we generated higher pre-tax and net profits, as well as the EBITDA and EBIT margins. Accordingly, we were able to revise our forecast for the 2005/2006 financial year upward – said Magłorzata Iwanejko, President of the Management Board of Zakłady Azotowe Puławy. – This is good news for investors.

In the light of the revised forecasts for the 2005/2006 financial year developed on the basis of the Company’s performance in the three quarters (July 2005–March 2006), Zakłady Azotowe Puławy is expected to generate annual sales revenue of PLN 1,989m (compared with PLN 1,909m previously forecast), pre-tax profit of PLN 163m (compared with PLN 148m), net profit of PLN 123m (compared with PLN 117m), EBITDA of PLN 269m (compared with PLN 253m) and EBIT of PLN 154m (compared with PLN 144m).

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