Moody's confirms CE Wood

Moody's Investors Service said it confirmed CE Wood's long-term national scale corporate family rating of Baa3.cz.

The outlook is stable.

This action concludes the review for further possible downgrade initiated in February and reflects CE Wood's success in securing new logging contracts for 2007 and Moody's expectation that it will at a minimum maintain its share of contracts that Lesy Ceske Republiky (Aaa.cz with stable outlook) intends to award in late 2007.

It also reflects management's successful restructuring efforts with the aim of making the company less reliant on the logging business by building wood processing capacity, Moody's said, and the company's return to operating profitability.

These positive factors are tempered by CE Wood's exposure to the competitive tenders of Lesy Ceske Republiky, a state-owned company which owns 50% of all Czech forests, the agency said, and the fact that wood trading has been eliminated from the tender's scope, reducing profit potential for logging services.

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