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PannErgy losses linger as rising sales costs erase revenue

Hungarian geothermal-energy company PannErgy sustained consolidated net losses of HUF 134 million in second quarter of 2011, little changed from consolidated net losses of HUF 131 million in Q2 of 2010 as rising cost of sales and higher net financial losses counterbalanced an increase in revenue, PannErgy announced in the company's H1 unaudited, consolidated IFRS report on Monday evening.

The report noted that the bulk of the revenue as well as the rise in revenue and operating profit reflected the performance of the plastics unit PannUnion group.

PannErgy has agreed to sell its 95.3% stake in PannUnion to Luxembourg-registered special-purchase vehicle Pannunity earlier in the summer; the company expects to get the necessary approval of four European countries' competition offices for the deal by the end of August. The spinoff has been designed to finance Pannergy geothermal energy strategy

PannErgy generated consolidated revenue of HUF 4.35 million in second quarter of 2011, up 15.5% from a year earlier. Cost of sales rose more, by 18.2% to HUF 3.35 million in second quarter of 2011. Gross profit still rose 7.2% in HUF 995 million but the gross profit margin fell to 22.9% from 24.6% a year earlier.

Operating profit rose a sharp 59.4% in one year to HUF 247 million in Q2, and EBITDA rose 27% to HUF 551 million.

Losses from financial transactions widened, however, to HUF 324 million from HUF 285 million in Q2 of 2010, and resulted in HUF 77 million pre-tax profit, almost 60% less than a year earlier.

PannErgy recorded consolidated net profit of HUF 51m in first half of 2011, compared to consolidated net losses of HUF 111 million in H1 of 2010 as sales and operating rose rapidly and financial losses dropped in the period.

H1 revenue rose 14.4% to HUF 8.35 million, and direct cost of sales rose 18.6% to 1.86 billion.

Operating profit rose 18% to HUF 335 million in H1 this year. Losses from financial transactions declined to HUF 205 million from HUF 376 million in the first half of last year.

Consolidated EBITDA came to HUF 924 million, up from HUF 838 million during the same period in 2010.

PannErgy, formerly known as Pannonplast, spun off its plastic businesses into PannUnion, which trades in the B-category at the Budapest Stock Exchange.