Czech VW unit says firm crown dents 2007 profit

...carmaker said on Wednesday.

The crown, in a long-term appreciation trend, pushed to life-time highs against both the euro and the dollar this week as capital fleeing dollar-denominated assets and risky markets on concerns about a U.S. slowdown poured in.

Skoda is the largest Czech company with sales equal to 7.1 billion euros ($10.09 billion) last year and the largest single exporter in a country which relies heavily on exports to grow.

"We have been watching the Czech crown's firming with concerns for a long time," said Skoda spokesman Jaroslav Cerny.

"Because we export nearly 90 percent of production, we are confronted with losses in the order of billions of crowns against last year," he said without elaborating on the size of expected profit reduction.

Cerny said Skoda's profits would take a hit despite routine hedging of the company's export revenue against currency losses for several years ahead.

The crown scaled an all-time peak of 18.89 to the dollar and hit a record 27.12 to the euro on Monday, benefiting from a healthy economy which has made it a safe haven for jittery investors.

The currency has firmed 18.2 percent against the dollar and 4.4 percent to the euro over a year ago. By comparison, in mid-October it was around 41.7 to the dollar and 35.4 to the euro.

Currency fluctuations quickly impact pricing and other business decisions in the Czech Republic, one of the most open economies in the world, with the sum of exports and imports accounting for 130 percent of economic output.

Skoda said the crown's rise hampered its investment plans.

"The current strength of the crown and the fact that the Czech Republic cannot be expected to enter the euro zone in the near future have a negative impact on the quality of our planning, and at the same time, do not help investments in the Czech Republic," said Cerny.

Last month, Skoda announced a plan to invest 2 billion euros ($2.85 billion) into an expansion in the Czech Republic over the next five years.

[PRAGUE/Reuters/Finance.cz]