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UPDATE 1-KGHM sees 2010 net touch below 2009 target-sources

Published 12/17/2009, 06:30 AM
Updated 12/17/2009, 06:33 AM
HG
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* KGHM sees 2010 net below PLN 2.25 bln 2009 tgt-sources

* Analysts say market expected higher forecast

* Shares fall as much as 3.3 percent (Adds analyst comment, share reaction, more detail)

By Agnieszka Barteczko and Adrian Krajewski

WARSAW, Dec 17 (Reuters) - Copper miner KGHM has forecast 2010 net profit of just below this year's target of 2.25 billion zlotys ($769.2 million), two company sources said, citing documents prepared for a KGHM supervisory board meeting.

KGHM Chief Executive Herbert Wirth declined to comment on the information from the sources or any of the management's preliminary proposals for the 2010 budget, which the supervisory board will discuss at a meeting on Friday.

"The profit (in 2010) is slightly lower, mainly because the budget assumes a stronger zloty," one of the sources said.

Shares in Europe's No.2 copper miner fell as much as 3.3 percent on the news, falling below 100 zlotys per share, as analysts saying the market had expected something more.

The stock has surged 260 percent this year on the back of recovering metal prices.

"Market consensus was higher," ING Securities analyst Andrzej Knigawka said. "We forecast next year's profit at 3 billion zlotys, so the news has a negative impact on the market.

"The management is bearish on copper prices next year -- sees them lower -- so they will probably budget the profit between 2.0 and 2.25 billion zlotys."

Copper prices are denominated in dollars, but KGHM, which exports bulk of its copper production, books costs and reports results in zlotys. A stronger zloty makes the state-controlled miner book lesser profit of the metal it sells.

Earlier this month, the state-controlled KGHM said it expected average copper price next year to remain at levels similar to 2009.

According to the company, the prices averaged $4,999 per tonne in the first 11 months of 2009. In its budget for this year, KGHM set the figure at $5,045, or 30 percent below the current market level. ($1=2.925 Zloty) (Writing by Adrian Krajewski; editing by Simon Jessop and Karen Foster)

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