Large caps help WSE rebound, TPSA sags

Solid gains by oil group Polski Koncern Naftowy Orlen (PKN Orlen), copper miner KGHM Polska Miedź and Bank Pekao last week helped the Warsaw Stock Exchange (WSE) bounce back from gloomy global sentiment. The sour international mood followed an announcement by WorldCom, the second largest long-distance phone operator in the United States, that it had improperly accounted for nearly $4 billion in expenses. Traders said the exchange's near-term fate would depend on the global mood. "… Because we are strongly correlated to global sentiment right now, it will all depend on what is happening on other stock exchanges," said Ewa Radkowska, a portfolio manager at ING Investment Management. Telecoms operator Telekomunikacja Polska (TPSA) bucked the slight upward trend, with its shares suffering continued losses as worries over a potential share overhang and a cut in its rating outlook weighed on Eastern Europe's largest issue. Treasury Minister Wiesław Kaczmarek said he may transfer some of the shares in TPSA to ailing state companies, which could then sell them to raise funds to recapitalize. Earlier this year the government agreed to give around 4% of its TPSA shares to two state-owned banks, which knocked down the operator's stock price on fears the lenders could soon flood the market with its shares.

KGHM sees strong first half KGHM said last week it expected a strong first-half unconsolidated net profit, but kept its 2002 forecast unchanged at zł. 52 million ($13 million). Consolidated results for KGHM, the world's seventh largest copper producer and No. 2 by silver output, are likely to stay in the red in 2002 due to heavy losses in its fixed-line telecom business. In the first quarter, KGHM returned to profitability for the first time since mid-2001 with zł. 60 million ($15 million) in net unconsolidated profit. But KGHM's consolidated net profit plummeted to zł. 2.9 million ($730,000) in the first quarter from zł. 36.3 million ($9.1 million) in the same period last year. "Our (unconsolidated) results after the first five months indicate the firm will have a strong net profit in the first half of the year," said Stanisław Speczik, KGHM's chief executive officer. "Our forecasts for the second half of this year are more cautious due to the poor world business climate and weak domestic growth. It is too early to change our estimates." Speczik also said that KGHM managed to trim its copper production costs to $1,520 per tonne in the January-May period of 2002 from $1,620 in the same period last year. The company is due to release its second-quarter unconsolidated results on Aug. 5 and consolidated figures on Aug. 14.

BPH-PBK sees profit despite shipyard loan Poland's second-largest private banking group BPH-PBK said last week it expected to show a net profit in the second quarter despite creating further provisions for doubtful loans to the failed Szczecin Shipyard. At a presentation for banking analysts, Jadwiga Zaręba, an adviser to BPH's chief executive officer, said the bank provisioned an additional 30% of its reported zł. 280 million ($70 million) loan to the shipbuilder in the April-June period. "Presently we have provisioned around half of our exposure to this entity," she said. Provisions at around 20% of the loaned sum were created in the first quarter, she added. Zaręba declined to say how much the bank loaned to Szczecin, which sent shockwaves through the banking sector when it revealed it had borrowed zł. 1.4 billion ($350 million) from several banks. She said the zł. 280 million ($70 million) reported by local media was "close to reality." Zaręba said the bank, which was created at the end of last year from a merger of German HVB Group's two units, expects a quick restructuring and stabilization of its small-firms segment should help offset the negative impact of the loan. BPH stock, which enjoyed a strong run earlier this year, plunged some 15% this month after the Szczecin yard - now filing for bankruptcy - shocked the market with the amount of debt owed to Polish and foreign institutions. Bank Pekao, Poland's largest banking issue, gained slightly late last week after sliding 10% amid concerns the lender may miss this year's earnings target due to large loan exposure to the failed shipyard. BPH, whose consolidated net profit plummeted by a third to zł. 62 million ($15.5 million) in the first quarter of the year, has never said what loss it is likely to suffer from the Szczecin loan. HVB, formerly known as HypoVereinsbank, holds more than 70% in the Polish bank, which with a market value of $1.86 billion is the Warsaw bourse's fifth largest issue. - Reuters