RPT-Czech fibres maker Pegas sees profit growth

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WARSAW, March 21 (Reuters) - Czech artificial fibres maker Pegas Nonwovens expects its net profit to grow this year thanks to lower debt servicing costs, Chief Financial Officer Ales Gerza said on Wednesday.

Pegas, listed in Prague and Warsaw, is the second largest fibres supplier to producers of diapers and feminine hygiene products in Europe by market share, after British company Fiberweb .

Although Pegas's 2006 revenues were at an all-time high of 120.9 million euros ($160.9 million), up 10.5 percent on 2005, its net profit fell 22.3 percent to 20.7 million euros.

"This year the costs of servicing our debt will be much, much lower than in 2006, which will enable us to increase net profit," Gerza said at a news conference in Warsaw.

Pegas aims to reduce its yearly debt servicing costs to around 8 million euros, depending on the exchange rate with the Czech crown, down from 18.8 million euros in 2006.

The company said it will invest in its eighth and most specialised production line, which will cost 19 million euros this year and 17 million in the first quarter of 2008.

The new line will increase Pegas's production capacity by 28 percent to 69,000 tons.

Further into the future, the company plans to build another specialised production line in Russia, which will cost an additional 40 million euros. The investments mean the company does not plan to pay out a dividend in the near future, it said.