Fourth-quarter flop

The gas monopoly's net profit in the final quarter of 2005 was zł.213.7 million, a fall of 35 percent compared with Q4 2004. It said domestic gas-price increases failed to keep pace with the cost of importing Russian gas. Sales revenues rose to zł.4 billion in Q4 2005, compared with zł.3.2 billion in the same period in the previous year.

On the whole, net profit increased by 2.4 percent to zł.812 million for the year, while sales increased to zł.12.55 billion from zł.10.9 billion in 2004. Operating costs were up to zł.11.4 billion, from zł.9.6 billion.

Although analysts had expected the gas giant's profits to dip, the actual figure was 15.4 percent below estimates, according to Peter Tordai from investment bank KHB in Budapest. However, PGNiG expects its net profits to rise sharply in Q1 2006, after cold weather boosted gas sales.

One of the most difficult problems the firm will face is rising Russian gas prices. Russia's Gazprom wants to increase its gas-supply prices and the two companies are scheduled to meet for discussions this month.

"In mid-March we are planning to meet with [Gazprom arm] Gazexport, which wants to change the price-setting mechanism and in fact raise prices. We still think that no changes should take place," said acting chief executive Jan Anysz. (Reuters)