30 October 2007

Good Quarterly Performance and Positive Forecasts

In Q1 of the 2007/2008 financial year, Zakłady Azotowe Puławy increased its sales revenue in all product segments to PLN 488.1m, 6% up from the corresponding period of the previous year. The net profit increased more than two-and-half-fold, totalling PLN 38.8m. The Company also expects very good results for the full financial year of 2007/2008.

In Q1 2007/2008, the Company managed to increase the sales value despite lower sales volumes. A strong rise in the selling prices of individual products can be observed, especially in the fertiliser market. The demand for nitrogen fertilisers has grown as a consequence of record grain prices in Poland and a general improvement in the financial standing of farms, compelled to make early purchases of chemicals for plant production.

 “These results reflect the very good conditions prevailing on the fertiliser market. The prospects for the non-fertiliser market look good as well, therefore we are expecting better financial results at the end of the 2007/2008 financial year than for the previous year. We forecast record sales revenue of PLN 2,278.4m, while the profit is expected to grow by more than PLN 11m over the previous year’s figure,” says Lech Kliza, member of ZA Puławy’s Management Board, responsible for finance.

The Company recorded a nearly 14% increase in the revenue from sales of fertilisers despite lower volume of supplies. The selling prices of ammonium sulphate, UAN and urea have been running especially favourably. The revenue from sales of the last product was up by nearly 54% from the corresponding period of the previous year.

The first quarter of each financial year is typically characterized by a lower supply of products, especially fertilisers, primarily due to the harvest season in the agriculture sector. Nonetheless, the Company increased the sales value taking advantage of the growing trend in the prices of key products. During the quarter, ZA Puławy carried out scheduled overhauls and upgrade work, including the upgrade of the Caprolactam Plant, which led to lower sales of this product.

In comparison with Q1 of the 2006/2007 financial year, the revenue from sales of melamine was 1.2% higher. Limited supply accompanied by growing demand for this product caused by the boom in the construction sector as well as other factors drove up the selling prices on global markets.

The sales of melamine increased the share of exports in the total sales of non-fertilisers. There was also a clear improvement in the profitability of the other products in this segment.