Pannonplast to set up Serbian plastic packaging unit

Pannonplast Nyrt, a Hungarian exporter of plastic yoghurt cups, will spend Ft 355 million ($1.6 million) setting up a consumer packaging unit in Serbia to add a third foreign market to its operations. Pannonplast, based in Budapest, expects production to start in the Q1 of 2007, it said in a stock exchange statement. By having a company in Serbia, Pannonplast will be exempt from a 20% customs levy it currently must pay. The company, which also operates in Romania and Ukraine, has been selling property and unprofitable units to stem losses and concentrate on consumer packaging. It will spend a total of € 10 million ($12.8 million) on building the plant in Serbia this year and buying another in Bulgaria in the H1 of next year CFO Dénes Gyimóthy said Aug. 1. Pannonplast expects its Serbian unit to contribute Ft 400 million to revenue in its first year of operation, which will probably triple in three years, the company said.

The company also said it plans to take part in building bioethanol plants worth a total of Ft 200 million by 2008 after it started in June to build up a new division to manage projects using alternative energy sources. Gyimóthy said Aug. 1 Pannonplast plans to invest Ft 10 billion buying stakes in companies from various industries in the next three years, which it would keep for three to five years. The shares have jumped 81% this year, fueled by the company's strategy of selling unprofitable units. They rallied 8.2% to a five-year high of Ft 3,500 in Budapest , giving the company a market value of Ft 14.7 billion. (Bloomberg)