Kety has published its forecast of 1Q07 results which is above our expectations on EBIT and profit. Net profit is expected to come in the range of PLN 20-22m, which is 7.5-18.3% above our estimate of PLN 18.6m. Reported net earnings should grow by 117-139% y/y due to off-charges related to fire in the base period. On an adjusted basis, company’s estimates imply a growth by a solid 24-37% y/y. In our opinion the results are good and should improve the sentiment towards Kety, depressed after the disappointing results for 4Q06.
Sales should come in at a minimum of PLN 270m for 1Q07, up more than 20% y/y, in line with our estimate of PLN 273m. As we expected the best sales contributor was aluminium profiles segment, growing by more than 25% y/y. Both extruded products and especially flexible packaging grew above our estimates. We expect a further delay in the start of Ukrainian operations and no material contribution to 1Q07 sales.
EBIT is expected to come in the range of PLN 24-26m for 1Q07, up 111-128% y/y. Excluding one-off costs related to the fire in 1Q06 and management stock option program in 1Q07, EBIT should grow by a decent 20-30% y/y. This implies maintaining adjusted margin from 1Q06 versus our expectations of lower margin due to some 10% y/y growth of depreciation, 5% y/y growth in aluminium prices in PLN terms, and the start-up costs of Ukrainian operations.