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Cancellation of state grant will not affect Zsolnay operation

Hungary's Zsolnay Porcelain Manufacture has not counted on an order from IKEA for some time, thus the cancellation of a state grant for investments related to the order will not affect the company's operation, Peter Elkan, communications director for M-B, which holds a minority stake in Zsolnay, told MTI on Monday.

Zsolnay signed a preliminary contract with IKEA in 2009 to produce 5,000- tons of porcelain products a year over seven years from the end of 2009. Zsolnay needed to make a HUF 3 billion investment at its plant in Pecs (SW Hungary) to make the products. State and European Union funding were to have covered about half of the capital expenditure.

The state's part of this funding was cancelled by a government decree published on Monday.

MTI learnt from a government source who wished to remain anonymous that IKEA did not hurry the cooperation because of the crisis and the final contract for the order was never signed.

Elkan said the IKEA products, mostly mass-produced dinnerware did not fit the profile Zsolnay's new owner, the property developer Gellért Jászai, envisioned for the company.

Jászai said earlier he wanted the company to return to its roots as a maker of fine porcelain building ornaments.

Zsolnay had a HUF 150 million loss on revenue of HUF 740 million in 2009. It expects to close this year with turnover of about HUF 1 billion, but raise this amount to HUF 2 billion later. Staff numbers could also rise from the current 250 to 300. (MTI-Econews)