TPSA dials up sinking profits

Telecoms giant Telekomunikacja Polska (TPSA), Eastern Europe's largest listed company, said last week its group net profit sank 86% to zł. 183 million ($43.6 million) last year due to heavy provisions for restructuring. In 2000, TPSA made a net of zł. 1.33 billion ($317 million), according to Polish Accounting Standards (PAS). TPSA had announced that in the fourth quarter it would make provisions of zł. 1 billion ($238 million) for layoffs and overdue receivables as part of a massive restructuring plan to whip the overstaffed company into shape. As a result, it turned to a zł. 624 million ($148.6 million) net loss in the fourth quarter and an operating loss of zł. 356 million ($84.8 million). In the fourth quarter of 2000, TPSA made a net profit of zł. 372 million ($88.6 million). Restructuring is needed to improve TPSA's operational efficiency as its core fixed-line business loses steam. TPSA's sales grew 9.1% last year to zł. 17.32 billion ($4.1 billion), against analyst expectations of zł. 17.39 billion in sales. "The bottom line is significantly below expectations, perhaps because the loss of TPSA's mobile arm Centertel was larger than expected," said Andrzej Kasperek, analyst at Schroder Salomon Smith Barney Bank Handlowy brokerage. TPSA's shares were up 4.6% to zł. 14.95 for the five-day period ending Thursday. The firm's restructuring plans ran into trouble with influential trade unions, which forced TPSA into making many of the planned job cuts voluntary. Also, many of the layoffs will simply involve transferring employees to TPSA's subsidiaries. A France Telecom-led consortium controls 47.5% of TPSA and is expected to gain a majority in the Polish operator later this year.

Żywiec may remain in red in 2002 Poland's largest beer group Żywiec, whose full-year net loss narrowed sharply in 2001, said last week its financial results should improve but it might not make it into profit this year. Żywiec, majority-owned by Dutch Heineken, reported its consolidated loss shrank to zł. 105 million ($25 million) last year from zł. 463 million ($110 million) in 2000. "Our ambition is to make a profit on a consolidated level, but it is hard to say when it will take place ... The chances are slightly more than 50:50 that we will post profits this year," Chief Executive Officer Nico Nusmeier said. The company said that despite a sharp rise in excise taxes on beer last year and falling domestic demand in Poland, its group sales grew 12% to zł. 2.63 billion ($626 million). The brewer, which with a market value of $730 million is the Warsaw Stock Exchange's 11th-largest stock, turned to a zł. 65 million ($15.5 million) operating profit from a zł. 126 million ($30 million) loss in 2000. But financing costs, which increased 16% to zł. 195 million ($46.4 million) due to heavy debt servicing, weighed on its bottom line. "We have completed many difficult and costly restructuring programs," Nusmeier said. "Now we have to focus on a further debt reduction." Żywiec, which owns four brewers and six nationwide brands in Poland, produced nearly 8 million hectoliters of beer last year, grabbing nearly 32% of the local market. Its biggest rival is Kompania Piwowarska, controlled by London-listed South African Breweries (SAB), and Okocim, a unit of Denmark's Carlsberg. Poland's once rapidly growing beer market came to a virtual standstill last year as the country's economic slowdown, sharp hikes in excise taxes and tightened alcohol advertising regulations cut into beer sales. Żywiec shares were up 1.5% to zł. 268 for the five-day period ending Thursday but turnover was low due to the stock's small liquidity, as the brewer's stable investors hold a vast majority of its shares.

ComputerLand The consolidated net profit of computer systems integrator ComputerLand rose to zł. 29.8 million ($7.1 million) last year, up 19% from 2000, the company said last week. Earlier the company said its full-year unconsolidated net profit increased 25% to zł. 30.3 million ($7.2 million). - Reuters