Teich Poland, a part of Austrian Constantia Packaging, one of top European players in flexible packaging, plans to expand its production capacity in Poland. Teich Poland estimates its domestic market share in flexible packaging at 5-8%, compared with Kety’s 20%. According to Krzysztof Miszczak, CEO of Teich Poland, quoted in the daily Parkiet, the augmented capacity will be first of all directed to exports. As an explanation for the plan to target exports, he stated that recent growth of the flexible packaging sector in Poland, at 5-7%, had been lower-than-expected.
We believe that the news might have a slightly negative trading impact on Kety shares, as the intensified competition might make the recovery of the packaging business after the fire more difficult and lead to an erosion of margins.
Recently, Kety’s CEO, Dariusz Manko, stated that the company might consider, in the long-term, a disposal of the packaging division, as the it is the most competitive segment and the most difficult one to increase market share in of all its businesses. We believe that the current negative sentiment towards the stock might continue, at least until the announcement of the 1Q06 results preview scheduled for 20-31 March.