Zelmer slashes forecast on bad currency hedges

WARSAW Jan 30 (Reuters) - Polish home appliance producer Zelmer ZELM.WA has cut its 2008 profit forecast for the second time in a month due to mounting losses on currency hedging, the company said on Friday.

Zelmer cut its net profit expectations by 23 percent to 26 million zlotys ($7.5 million) after increasing its provision for losses on currency hedges to 28.3 million following a steep decline in the zloty.

The company, which had already cut its forecast in December to 33.6 million zlotys from 49.1 million after making a currency loss provision of 18.6 million, said it was in talks with banks to restructure its outstanding currency contracts and limit their impact on future earnings.

Several Polish exporters have been caught betting the wrong way on the zloty after the currency erased its earlier gains and slumped to the lowest level in more than four years.

Earlier this month Polish foundry maker Odlewnie Polskie ODPL.WA filed for bankruptcy, becoming the first Warsaw-listed company to face bankruptcy because of currency options.

Last month the Polish financial watchdog estimated local banks may need to make as much as $284 million in provisions to account for client losses on currency options.

Analysts cautioned, however, that the figure could grow as the zloty continues to weaken. The Polish currency is down more than 11 percent since the start of the year and has lost 40 percent from its all-time high in July. (Reporting by Piotr Skolimowski, editing by Will Waterman)