Zorbas issues negative profit warning

The management of A. Zorbas & Sons (ZRP) issued a negative profit warning with respect to its first quarter results compared to its performance a year ago in the same period, blaming the hit on increased costs related with the operations of a section in the new production unit in early 2007 (higher unit production costs); higher labour costs, higher raw material and energy costs.

Management also stressed that the increased fixed costs associated with the new production unit will burden the Company through the whole 2007, as it is expected that gradually all sections of the new production unit will be put into operation. Upon completion, however, unit production costs are expected to be reduced and give a positive contribution to profitability.

A year ago in the first quarter of 2006, ZRP posted a net profit of CYP 675.000, according to data provided by Egnatia Financial Services. In light of the above developments (the higher fixed costs stemming from the new production unit), Egnatia said it shall revisit its financial forecasts and valuation model following the announcement of 1Q07 results and revert with a Company Update report.