Kety has published its forecast of 2Q07 results which is in line with our expectations. Net profit is expected to come in the range of PLN 20-22m, versus our estimate of PLN 20.6m. Reported net earnings should fall by 36-42% y/y due to insurance compensation related to the fire the company received in 2Q06. On an adjusted basis, company’s estimates imply a growth of 12-23% y/y. The outlook for 2Q07 is not likely to prompt us to change our full year forecasts.
Sales should come in above at a minimum of PLN 315m for 2Q07, up more than 24% y/y, fully in line with our estimate. As we expected the best sales contributor was packaging division growing some 25% y/y, off a low base affected by the fire. We expect no material contribution from Ukraine, with a further delay coming from local bureaucratic hurdles. We also expect some PLN 7m contribution from recently acquired Metalplast Zlotow.
EBIT is expected to come in the range of PLN 29-31m for 2Q07, down 26-30% y/y due to PLN 19.8m insurance compensation, Kety received after the fire in the base period. Excluding one-off costs related to the fire in 2Q06 and management stock option program in 2Q07, EBIT should grow by a decent 35-44% y/y. This implies adjusted EBIT margin of 9.4-10%, which is slightly above our estimate. We expect EBIT in 2Q07 to be negatively affected by costs of starting operations in the Ukraine and poor performance of Metalplast Zlotow.