Hungary´s largest plastics processor, Pannonplast Muanyagipari Rt (H-1225 Budapest; www.pannonplast.hu), is facing an arry of problems, with poor profitability and shareholder discontent at the forefront. What´s more, the company is also involved in a major stock market scandal. Some prominent shareholders, including Bela Karsai, president of plastics processor Karsai Holding Plc (H-8000 Szekesfehervar; www.karsai.hu), were calling for the ouster of Pannonplast´s management at an extraordinary general meeting (EGM), scheduled for 3 November.

Pannonplast´s 2002 performance was dismal. Declining business with pipes and housings for computer monitors, especially on the domestic market, led to a sales slump of 16%, which the prospering packaging division was unable to compensate. The downward trend was halted in Q3 2003, with quarterly net profit rsing to HUF 240m (EUR 0.9m). However, the bottom line for the first nine months was still negative. For 2003, analysts have predicted an operating loss of as much as HUF 2 bn (around EUR 8m) following a net loss of EUR 3.8m in 2002 on sales of EUR 106m (EUR 126m in 2001) and EBIT of EUR 1.6m (EUR 6.8m).

As a reaction to the continuing losses, Pannonplast in June merged its two Debrecen subsidiaries, Pannon-Tara (crates) and Pannon-Effekt (canisters) and cut more than 300 jobs. With third quarter results, management presented an 18-month action plan, which it said contained “realistically set efficiency enhancement targets.”

However, this may not be sufficient to thwart a takeover bid by Karsai, which already holds 12.77% of Pannonplast. The holding is regarded as the likely buyer of the 12.12% shareholding put up for sale by local financial investor Britton Capital. With annual sales of EUR 37m and a workforce of 1,200, the plastics processor has nine subsidiaries active in injection moulding (packaging, technical parts), blow moulding, thermoforming, film extrusion and mould making.