UPDATE 1-Czech Pegas '06 profit slightly above forecast

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PRAGUE, March 20 (Reuters) - Czech artificial-fabric maker Pegas Nonvowens posted a 22.3 percent drop in net profit to 20.71 million euros in 2006 due to higher costs of debt servicing, the company said on Tuesday.

The result beat the consensus market forecast of a 19.68 million profit in a Reuters survey of analysts.

The company, which makes fabrics for hygiene and construction products, said revenues rose 10.5 percent to 120.94 million euros, above the 121.18 million forecast.

"Revenues ... rose mainly due to the rising prices of raw materials, passed on to customers, and higher sales of specialised products," Pegas said in a statement.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 30.9 percent to 53.3 million euros.

But excluding exchange rate differences and re-pricing of an interest rate swap, the EBITDA rose just 3.4 percent to 42.1 million euros.

The company, which entered the Prague Stock Exchange in December last year, said it would open a 40 million euro production line in the fourth quarter of 2007, which would raise the proportion of higher-margin specialised products for hygiene and health sectors.

"The new production capacity could bring a rise in the share of revenue from the sale of specialised technologies from 23.6 percent in 2006 up to roughly 40 percent in the coming years," the company said.

It added it would continue to follow plans by its key customers, which could lead to an expansion of Pegas's production capacity abroad.

The stock rose 1.16 percent to 731 crowns after the figures, beating the wider Prague market.

"The results were slightly positive, I do not expect any lasting impact (on the market)," said Ceska Sporitelna analyst Radim Kramule.

He said he was keeping his "accumulate" recommendation on the stock with target price of 806 crowns.