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BorsodChem projects 20% revenue increase in 2005

Hungarian chemicals company BorsodChem projects consolidated sales revenue in excess of Ft 200bn in 2006, an increase of 20% over 2005, compared to last year's revenue rise of 17.6%, CEO F László Kovács said on Tuesday, after the publication of BorsodChem's annual report for 2005.

The projection is based on BorsodChem's ongoing investment programme, which boosted production capacity last year, and will raise it as well in 2006, Kovács said he expects operating profit and EBITDA to increase too, but declined to say how much. Operating profit increased 42% last year to Ft 16bn and EBITDA grew 30% to Ft 26.7bn. With a 15% EBITDA-to-revenue ratio, BorsodChem is one of world's best-performing chemical companies, Kovács said.
 BorsodChem plans to spend Ft 25.6bn on investments this year compared to Ft 49bn last year. BorsodChem expects to see further rises in oil prices, which push up the price of its raw materials. But Kovács stressed that the price of BorsodChem's isocyanate products are no longer determined by oil prices, but by supply and demand. Kovács said an increase in the centrally-regulated fee for using Hungary's electricity system would cost BorsodChem an additional Ft 1.5bn in 2006. He added that the measure puts BorsodChem at a competitive disadvantage considering 83% of its sales are exports.
 Kovács said BorsodChem buys electricity on the deregulated market, mostly from imports, but declined to reveal how much the company saves by doing so. Gas price rises also increase costs,  Kovacs said, adding that this affects competitors as well. BorsodChem paid Ft 2.7bn more on natural gas purchases last year than one year earlier. This year, the company expects to spend Ft 2bn more on purchasing natural gas.