Poland's Ciech to Take Impairment Charge, Cut Jobs

Poland's chemical maker Ciech plans to take around a 450 million zloty ($132.57 million) impairment charge in the second quarter and lay off 10% of its staff as part of a shake-up under new management, the group's newly-appointed chief executive said.

Dariusz Krawczyk told Reuters that the impairment charge related to losses on the debt-laden group's unprofitable units.

Ciech is the smallest of the three state-controlled chemical groups, behind Tarnow and Pulawy. It made a profit of 2 million zloty in 2011 and 22 million in 2010.

The company has struggled to make much profit because of debts of around 1.3 billion zlotys, of which 300 million zlotys matures in December.

"Ciech's problem in the last few years was that it was taking on debt to acquire companies, but failed to integrate them," Dariusz Krawczyk told Reuters in an interview.

Krawczyk, who took on the CEO post at Ciech at the end of May, said the group would lay off some 10% of its staff in the next twelve months, but that number could grow. Ciech currently employs around 6,000 people.

Debt reduction

Krawczyk plans to streamline all of the group's production lines, of which some could be sold, but his main target is to reduce Ciech's debt to core earnings ratio to 1.1 in 2015 from the current level of 4.1.

"By 2015 Ciech is to regain the ability to grow organically and to make well-thought acquisitions," he said.

Poland holds a 39% stake in Ciech, which has been put up for sale alongside Tarnow and Pulawy, but so far has not attracted much interest.

In May sources said Czech investor Zdenek Bakala planned to launch a bid for Ciech, but local media reported later Bakala pulled out as he could not reach an agreement over the price.

Krawczyk declined to comment on Poland's plans to sell Ciech.

"My goal is to restructure the group, no matter who its owner will be."