All that glitters

Copper giant KGHM released its Q1 figures last week, revealing that net profits grew by 10 percent year-on-year to reach zł.914 million. Meanwhile, sales revenue reached zł.2.64 billion.

"Q1 results were according to our plans. They were the result of the high price of copper," said Krzysztof Skóra, KGHM's president. The average price per tonne of copper went up from $4,944 (zł.13,682) in the first quarter of 2006 to $5,941 (zł.16,442) at the end of Q1 of this year. Sales of copper account for 80 percent of KGHM's revenues. The firm is also the world's second-largest silver producer.

Skóra explained that the good results were also caused by a dividend payout from mobile phone operator Polkomtel, in which KGHM has a 19.6-percent stake. The mobile operator paid zł.202-million to KGHM.

The company's result could have been even higher. Two years ago, KGHM introduced hedging transactions to secure the prices of metals. The board estimates the cost of hedging to be around zł.244 million in the first quarter. The firm's hedging policy concludes in the middle of the year, meaning that Q2 results will also be affected.

According to the management board, Q1 results already add up to 25 percent of the projected annual revenue and 31 percent of anticipated net profit. Despite this, the company said it doesn't plan to change its annual prognosis.