Chemical Notes

Plastika faces competition problems
Imuna operates below capacity
Nafta Gbely suffers profit decline

Plastika faces competition problems

The results of Slovak plastics producer, Plastika a.s. Nitra, for the first quarter of 1998 (1Q98) confirmed the suspicions of analysts from the Dutch investment bank ING Barings that the company would not be able to survive in the long-term without merging with a strong multinational company.

In 1997, Plastika faced growing problems with competition on domestic and export markets. The company's profit was also adversely affected by a weak Czech crown and high interest rates. Plastika reported that its net profit for the first quarter of 1998 was only 1.2 million Slovak crowns (Sk) - $ 35,000 - which is a mere 30% of 1997's figure despite strong growth in the construction sector in 1Q98.

Plastika posted a pre-tax profit of 75.5 million Sk ($ 2.2 million) for 1997, which is 26% down from 1996. Net profit was 45 million Sk, which corresponds to an earning per share of 65 Sk. The annual general meeting decided to pay out a dividend of 25 Sk per share, up from 10 Sk in 1996. This corresponds to a 40% pay-out ratio, and at the current share price of 355 Sk, the dividend yield is 7.04%.

The company's results signal that problems with fierce competition are increasing. Therefore, ING analysts have argued, Plastika will become a target for acquisition by a multinational corporate in the mid-term horizon.

Imuna operates below capacity

Imuna Šarišské Michaľany, the only plasma processor and a blood derivates producer in Slovakia, was forced to cut its production to 80% of capacity, due to the long-term crisis in Slovak healthcare.

According to Peter Schvalb, the Production Director at Imuna, the company has not been able for a long time to decrease its volume of liabilities, with company turnover at 141 million Sk ($4.1 million) and receivables standing at 193 million Sk ($ 5.7 million).

60% of Imuna's receivables are owed by Slovak hospitals, which absorb 80% of the company's production. Because only 50% of production is covered in the payment term, the company cannot operate at full capacity. Schvalb confirmed that in the past six months the factory had twice had to cut the salaries of 100 of its 630 total employees to 60% of their normal monthly wages.

"Given the fact that our current technology doesn't meet rigid international norms, Imuna is not GMP certified and so cannot sell its products on the western European market," said Schvalb, adding that Imuna's further development depends on reconstruction of the factory, a project requiring about 835 million Sk.

Nafta Gbely suffers profit decline

According to the stock market, the Slovak oil company Nafta Gbely recorded a net profit of 200 million Sk ($5.9 million) in 1Q98, which compared to the same period last year represents a 3.3 million Sk ($0.1 million) decline.

Company sales of goods reached 85.5 million Sk, while sales of all company products climbed to 666.3 million Sk. Production volume hit 658 million Sk. The company's total assets stood at almost 9.45 billion Sk by March 31 of this year, which translates into an annual boost of 2.07 billion Sk. This rise was caused mainly by an increase in financial investments, which increased by 1.38 billion Sk.

Nafta Gbely's basic capital is more than 3.23 billion Sk. The company is involved in coal mining, gas storage, geological surveying and engineering and building initiatives.

Last year, the company's after-tax profit reached 317.8 million Sk, or 98,4 crowns per share. Compared to 1996, this result was down 38%.

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