Polish copper miner KGHM (KGHM.WA: Quote) reported a 36-percent drop in first-quarter net profit, but beat expectations as the weaker zloty and hedging helped cap the effect of sagging copper prices.

The unconsolidated earnings, on which investors focus, fell to 628 million zlotys ($191.2 million), compared with 467 million seen in a Reuters poll. Sales fell by a fifth to 2.38 billion zlotys, roughly in line with expectations.

KGHM benefited from Polish currency weakness against the dollar, in which it sells copper. It also hedged the bulk of first-half output at $6,200 per tonne, or 80 percent higher than the average copper price MCU3 in the first quarter.

After the close of Thursday's session, KGHM, one of Europe's top copper miners, raised its full-year net profit guidance to 1.9 billion zlotys thanks to a rebound in copper prices.

The miner expects this year's average copper price MCU3 estimate at $3,800 per tonne, or $600 higher than seen earlier. It forecasts sales at 9.07 billion zlotys compared with 7.05 billion.

KGHM is Warsaw's best performing blue chip this year, gaining 133 percent ($1=3.285 Zloty)

(Reporting by Adrian Krajewski; editing by Simon Jessop)

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