Yesterday, during a news conference, EU Industry Commissioner Guenter Verhaugen, stated that the European Commission will propose to the council of EU states to reduce aluminium import tariffs from 6% to 3%, with immediate effect.
Our view: The news is very positive for Kety, who pay 6% tariff on all imported aluminium. According to earlier statements of the company 50% cut in tariff would increase company’s operating profit by some PLN 5m, which constitutes some 3.2% of our 2006 EBIT forecast. The case initially came out in 2Q06 when Poland and eight other EU member states have undertaken a political battle, at the European Union Council of Ministers, to fully abolish a 6% duty on imported unwrought aluminium from Russia. The major opposing counties included Germany and France, backed by western European producers, who import aluminium from Africa with no duty.
We believe that 50% cut starting from 2007 is a very probable scenario that could be a compromise between two sides. Inclusion of reduced aluminium tariff would trigger an upward revision of our forecasts. We should expect a positive trading impact on Kety on the back of the news.