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LONDON (Thomson Financial) - Kazakhstan Kagazy Plc. posted a jump in net profit as it saw a 21.5 percent rise in first-quarter revenues in line with its expectations, mainly due to the price increases in the paper business implemented over the last year and the contribution from the commercial warehousing and industrial infrastructure segment (PEAK).
For the three months ended March 31, Central Asia's largest paper producer reported net profit up to $4.3 million compared to $0.1 million as revenues rose to $16.4 million from $13.5 million last year.
Chief executive officer Yuriy Bogday said the group's profitability level was impacted by higher energy costs as a result of an extremely cold winter in Central Asia, which led to the company's gas supply being cut for two months and substituted by more expensive fuel sources.
The group said the domestic and international credit crisis has weakened the demand for paper products in the near term and added it expects revenues to grow at a lower rate for the rest of the year than in the first quarter.
The company added it has undertaken a number of cost cutting measures, including staff reductions, during the quarter and said it expects to see the full benefit of these actions in the third quarter of 2008. It also said it will continue to look further for attractive acquisition opportunities.