Puławy's debut finds the wrong mix

On its first day of trading, chemical producer Puławy's stock opened at zł.53.7 but soon fell to zł.52, losing 3.7 percent of its IPO price. The zł.300 million offering was priced at zł.54 per share, at the top of an earlier announced range, and was heavily oversubscribed in the retail tranche. Twenty-nine percent of Puławy's shares were up for grabs, with the rest remaining in the hands of the state treasury.

The fall in Puławy's share price was due to a wider sell-off on the Warsaw Stock Exchange (WSE). The WIG20 index was down 2.7 percent as major global equity markets declined.

Puławy, Poland's biggest producer of nitrogen fertilizers, is the second major company from the chemical sector (after Police) to be privatized this year. With a market value of just under zł.1 billion, Puławy is one of the biggest companies listed on the WSE and the third largest chemicals producer, after Hungary's BorsodChem, and the Polish chemicals producer Boryszew.

Before the IPO, Puławy downgraded its predicted earnings 42 percent to zł.117 million for the financial year ending June 2006. This was due to a stronger złoty, which will dent its profits from export sales, and an expected sharp rise in gas prices. Revenues are expected to hold stable in comparison to the previous year at around zł.1.9 billion. (Reuters)