Darkness envelops PPC after forecast

Power utility’s shares tumble more than 20 pct after H2 profit warning; union takes legal action

The warning of a drop in profits from Greece's largest power company Public Power Company (PPC) sent its shares more than 20 percent lower on the Athens bourse yesterday, prompting unions to sue management for its «economic collapse.»

The power utility said it expects to post a big loss in the second half of the year due to increased fuel import costs and expensive purchases of energy from third parties to cover demand.

«Based on the data we have to date, results for the second half of 2008 are forecast to be worse than in the first half of the year,» PPC said in a statement.

PPC posted a worse-than-expected 111.80-million-euro loss in the first half, hurt by soaring energy costs, electricity purchases from abroad, and a one-off provision for carbon dioxide emissions. Last month the company, which was profitable in 2007, said it expected to break even in the second half.

PPC shares were hit hard after the profit warning, sinking 22.26 percent to 10.06 euros on the Athens Exchange. The Athens bourse's benchmark general index tumbled 5.87 percent.

Proton Securities said in a note the profit warning cancels out the previous guidance that implied a normalization in lignite generation, as well as a pullback in oil prices.

«We downgrade our estimates to reflect higher energy purchases and fuel oil costs. Visibility remains thin, whereas we would expect the presentation of the 2009 to 2014 business plan next month to provide some clarity,» said Proton Securities.

Meanwhile, PPC's GENOP labor union said yesterday they «will file a suit against all responsible for the economic collapse of the corporation.»

The union also said it will issue an extrajudicial suit against PPC executives over «failure to carry out their duties.» «GENOP, with every means available, will do its duty. It will stop the economic collapse of the country's largest company,» the union said.