Kety’s CFO, Adam Piela, in an interview with Parkiet, gave an update on the potential consequences of last week's fire and the timing of 2006 management forecast. Kety, in order not to lose customers, is going to outsource production to competitors and restore damaged roto printers as soon as possible. According to Piela, the company hopes to retain the largest international customers who have already agreed to continue cooperation, and might lose only some smaller firms who need spot deliveries. He stated that the first new printers should be purchased as early as 1H06, and it has not yet been determined what could be recovered from the damaged capacities. Piela estimates that losses are estimated at PLN 40m and should some assets be recovered, it could go down to PLN 30m. The company maintains its 50% dividend payout policy for 2005 and only a large acquisition could influence it. The modified strategy and 2006 guideline will be presented at the beginning of February.
The company indicated that the impact of the damages could reach up to PLN 20m, and almost entirely decrease this year's net profit. Given the rebound in the building sector and the revitalisation of highway construction plans, Kety's CFO sees good prospects for the company in 2006 on the domestic market. At the same time he estimates that the peak in aluminium price is already behind and he expects a small correction further in the year. We regard management’s estimates as the worst case scenario and we cut our 2006 EBIT and net profit estimates by PLN 14.0m and PLN 11.2m respectively. We reiterate our Sell recommendation on Kety with a fair value estimate of PLN 122.4.