KGHM sees bearish earnings as copper sags-source

source Reuters

* KGHM sees 2009 net profit in tens of millions of zlotys

* Shares fall as much as 12 pct

(Adds further details, company comment, updates share price)

By Agnieszka Barteczko

WARSAW, Jan 22 (Reuters) - Europe's top copper miner KGHM KGHM.WA expects a huge earnings drop this year on the back of retreating metal prices, a source close to the company told Reuters on Thursday.

KGHM's battered shares fell as much 12 percent to their lowest in a month after the Reuters report and were down 9 percent to 28.4 zlotys by 1509 GMT -- helping drag Warsaw's main WIG20 index .WIG20 4.5 percent lower.

The state-controlled Polish company is valued at $1.67 billion, just a fifth of its value at its height in 2007.

A company source said the management's budget for this year puts the net profit in the tens of millions of zlotys, a far cry from 2.9 billion zlotys it expects for 2008 after earning 2.5 billion zlotys in the first nine months. KGHM is scheduled to release its full-year results in late February.

"The management assumes that the net profit will be minimal," said the source, who saw the budget draft but asked not to be named.

Analyst estimates for KGHM's bottom line this year, already slashed on the back of retreating copper prices, vary widely with ING Securities expecting some 145 million zlotys and BRE brokerage 583 million zlotys ($42.3-$175.3 million).

A KGHM spokesman declined to comment on the forecast, but added that the company will step up efforts to reign in costs that jumped in the recent years.

"This is negative news," said Robert Maj, analyst at KBC Securities in Warsaw.

"The reason (for the profit fall) is the low price of copper, which weighs on results given that labour costs will stay unchanged, while energy costs at KGHM should grow."

Three-month copper MCU3 has lost 64 percent of its value since an all-time high in July 2008.

Analysts bet the weakness will continue on slumping demand, adding that the Polish zloty's fall against the dollar, in which copper is denominated, only partly offsets the drop.

"KGHM has to switch on the 'survival mode' and wait for the metal to recover, which may happen in 2010 at earliest," Maj said.

The KGHM supervisory board will discuss the 2009 budget at its Monday meeting. ($1=3.308 Zloty) (Additional reporting by Adrian Krajewski; Writing by Chris Borowski; Editing by Sharon Lindores)

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KGHM sees bearish earnings as copper sags-source

	Anonymous Guest	#1 - Posted: 22 Jan 2009 21:16
source Reuters * KGHM sees 2009 net profit in tens of millions of zlotys * Shares fall as much as 12 pct (Adds further details, company comment, updates share price) By Agnieszka Barteczko WARSAW, Jan 22 (Reuters) - Europe's top copper miner KGHM KGHM.WA expects a huge earnings drop this year on the back of retreating metal prices, a source close to the company told Reuters on Thursday. KGHM's battered shares fell as much 12 percent to their lowest in a month after the Reuters report and were down 9 percent to 28.4 zlotys by 1509 GMT -- helping drag Warsaw's main WIG20 index .WIG20 4.5 percent lower. The state-controlled Polish company is valued at $1.67 billion, just a fifth of its value at its height in 2007. A company source said the management's budget for this year puts the net profit in the tens of millions of zlotys, a far cry from 2.9 billion zlotys it expects for 2008 after earning 2.5 billion zlotys in the first nine months. KGHM is scheduled to release its full-year results in late February. "The management assumes that the net profit will be minimal," said the source, who saw the budget draft but asked not to be named. Analyst estimates for KGHM's bottom line this year, already slashed on the back of retreating copper prices, vary widely with ING Securities expecting some 145 million zlotys and BRE brokerage 583 million zlotys ($42.3-$175.3 million). A KGHM spokesman declined to comment on the forecast, but added that the company will step up efforts to reign in costs that jumped in the recent years. "This is negative news," said Robert Maj, analyst at KBC Securities in Warsaw. "The reason (for the profit fall) is the low price of copper, which weighs on results given that labour costs will stay unchanged, while energy costs at KGHM should grow." Three-month copper MCU3 has lost 64 percent of its value since an all-time high in July 2008. Analysts bet the weakness will continue on slumping demand, adding that the Polish zloty's fall against the dollar, in which copper is denominated, only partly offsets the drop. "KGHM has to switch on the 'survival mode' and wait for the metal to recover, which may happen in 2010 at earliest," Maj said. The KGHM supervisory board will discuss the 2009 budget at its Monday meeting. ($1=3.308 Zloty) (Additional reporting by Adrian Krajewski; Writing by Chris Borowski; Editing by Sharon Lindores)