Sept. 5 (Bloomberg) –KGHM Polska Miedz SA (KGH), Poland's sole copper and silver producer, increased its profit forecast for this year by 16 percent as it benefits from higher prices of the metals and increased output.

The state-controlled producer expects net income of 9.64 billion zloty ($3.2 billion) this year on sales of 18.9 billion zloty, the company said in a regulatory statement today.

KGHM increased its forecast for the average annual copper price by 10 percent to $9,000 a ton from the $8,200 it predicted in January. Copper for three-month delivery slid $129, or 1.4 percent, to $8,947 a metric ton at 1:28 p.m. on the London Metal Exchange.

The company, based in Lubin, southwest Poland, expects to produce 570,000 tons of electrolytic copper, five percent more than it planned early this year. Silver output is to reach 1,144 tons, compared with an earlier forecast of 1,027 tons.

KGHM plans capital expenditure at 10.8 billion zloty this year, raising its target by 19 percent.