May 14 (Bloomberg) -- KGHM Polska Miedz SA, the Polish copper producer with the largest European mining output, said first-quarter profit rose 16 percent as prices of the metal more than doubled from a year earlier.
So-called unconsolidated net income, which excludes earnings at certain units such as phone company Telefonia Dialog SA, increased to 725.4 million zloty ($230 million) from 627.9 million zloty, the Lubin, Poland-based company said in a regulatory statement today. That missed the 812.6 million-zloty mean estimate of 10 analysts surveyed by Bloomberg.
Sales jumped 38 percent to 3.27 billion zloty, below the 3.29 billion-zloty estimate.
"Operationally there are no surprises in the results. Net income is lower than the consensus mainly due to higher than expected hedging costs," Marcin Gatarz, an analyst at UniCredit SpA, said by phone today.
State-controlled KGHM, Poland's sole copper producer, said the negative valuation of hedging instruments was 242 million zloty, as market prices rose above the level at which the company would benefit from executing the options. In the first quarter the producer bought more options that will allow it to sell part of its output at an earlier agreed price through 2012.
"This shouldn't have any impact on investors today, because KGHM's hedging strategy increases the probability that the company will meet its 2010 guidance," Gatarz said.
KGHM forecasts net income of 2.9 billion zloty this year, on sales of 11.7 billion zloty. The company said today earnings "won't differ significantly" from the forecast.
Copper on the London Metal Exchange more than doubled from a year earlier in the first quarter to an average of $7,275.2 a ton. The zloty was on average 19 percent stronger in the January-March period than a year earlier.