KGHM’s CEO Krzysztof Skora gave an interview for the daily Parkiet, in which he stated that he has signals from the Ministry of State Treasury that due to the big investment program of the company it is the intention of the Minsitry to pay no dividend from 2007 profits. He also stated that after closing 1H07, the company is going to revise its budget prompted by changing macro environment, namely copper price and curreny exchange rates. He denied to say if this could mean raising company’s forecast. Regarding new exploration projects, apart from recently received a licence for searching for copper deposits in Germany, Krzysztof Skora mentioned region of Volyn in the Ukraine. The deposits in the region are being researched at the moment and the results should be available in few months.
Our view: As current copper price is above the management’s budget assumptions we believe it is likely that the forecast could be increased after 2Q07 results. We think that with current 2007 profits outlook no dividend scenario is not very likely unless the trend on the copper market reverses. The decision will be made in 2Q08 with the consideration of the macro environment at that time. Our 2007 net profit forecast of PLN 3,856m is 29.5% above the management guidance of PLN 2,978m.