Mostostal Export is being consumed by debt

Mostostal Export's (ME) 2002 annual report, which has appeared with a two-week delay, proved that the situation of the company is difficult. The mistaken strategy of focusing on investing in property development caused liquidity problems, not helped by disastrously low sales of flats. ME's revenues dropped by 37% in comparison to 2001 to stand at zł. 117 million, while the net loss increased to zł. 82 million in 2002 from zł. 16 million a year before. A contributing factor is the growing cost of debt servicing, as the company had to borrow money in order to continue its basic operations. At the end of the 2002 the total interest on Mostostal's bonds and other debts amounted to zł. 24.6 million, while the value of current liabilities exceeded the value of working capital by zł. 14 million. "The company focused on smaller contracts in order to facilitate turnover," the firm said in a statement. (Parkiet, July 12-14, p. 3) M.M.