Cersanit to Expand Ukrainian Operation

Warsaw, Poland, April 11, 2007–Polish ceramic tile maker Cersanit  will get a EUR 80 mln loan from the European Bank for Reconstruction and Development (EBRD) to partly finance the expansion of its production capacities in Ukraine, the company’s main shareholder Michal Solowow told a press conference Wednesday.

“We plan the technological startup at the end of this year, with production at full capacities expected in 2008,” Solowow said.

The cost of the first phase of the investment is estimated at EUR 99 mln, with the EBRD loan to be used for the project. After the completion of the first phase, the company’s Ukrainian plant will produce 7 mln square meters of ceramic  tiles and 1 mln ceramic units a year. The second phase will double the plant’s production capacities and will cost some EUR 50 mln.

Cersanit plans to hire 700 workers in the first phase and eventually boost headcount to 1,200.

Solowow said the company wanted to start the second phase of the project in the spring of next year. He also said the company would like to begin producing in Russia.

“We treat Ukraine and Russia as home markets with similar distribution to that in place in Poland,” Solowow said. “We will replace most of our current imports from Poland with Ukrainian production on those markets.”

Cersanit will also export from the Ukrainian plant to Kazakhstan.

Solowow said the Ukrainian production capacities would reduce pressure on Cersanit’s  Polish operations, which are currently facing strong demand.

“There’s a supply gap in Poland, while our market share is at 42% here,” Solowow said.  “We also want to  expand in Romania, which is a very promising market.”

Solowow estimates the sales revenues of the company’s Ukrainian unit at PLN 300 mln a  year, with  the company generating positive cash flow immediately after the start of production.