New World Resources Plc today announces its unaudited financial results for the first half of 2013 and provides an update on NWR's business optimisation steps.
H1 2013 Financial summary
Revenues of EUR 493 million, down 29%.
Cash mining unit costsof EUR 84/t, up 22% on a 26% decline in production, down 10% on a stable production basis.
Mining administrative and selling expenses down 16% to EUR 93 million.
EBITDA of EUR (40) million.
Impairment of EUR 307 million on Company's coal assets.
Underlyingbasic loss per A share of EUR (0.56).
Net debt of EUR 653 million, and cash of EUR 176 million.
H1 2013 Operational summary
LTIFR of 5.65, an improvement of 25% and the best result in NWR's history.
Regrettably, two miners lost their lives in work related incidents this year.
Coal production of 4.3Mt, and external sales of 4.6Mt.
Coal sales mix of 49% coking and 51% thermal coal.
Coke production of 340kt and external sales of 298kt.
Update on business optimisation steps
1. EUR 60 million of cash-enhancing measures delivered.
2. Business portfolio optimisation underway.
3. FY 2013 production, sales, and cost targets reiterated.
4. Fully optimised current operations by the end of 2014.
It has become apparent since our last quarterly update that coal prices are gradually moving towards a new long-term normal. While we are seeing some initial signs of price stabilisation in the coking coal market, as well as positive news from Germany's labour and manufacturing markets, we do not believe that there will be a repeat of the boom years of 2008 and 2011 any time soon.
The ongoing weak coal price environment led us to recognise a non-cash impairment charge of EUR 307 million on our mining assets and we continue to be conscious of the market volatility and risks as described further in the Operating and Financial Review.
This is the 'new reality' and NWR is taking action to adapt to it. This includes the implementation of the previously announced EUR 100 million of cash-enhancing measures, including sell-down of inventories and additional cost savings. Even more importantly, we have accelerated the execution of the first phase of our 2017 strategy, with NWR's management team fully focused on our Czech mining operations. Our objective is to have a more efficient, leaner and more flexible mining business by the end of 2014.
What does this mean in terms of targets for 2014? Lower production of between eight and nine million tonnes, 60 per cent of coking coal in the sales mix, cash mining unit costs of EUR 60/t, lower overheads, less than EUR 100 million of CAPEX, and further improvements in our safety performance. These targets necessitate many difficult changes, including reducing our workforce. But I must stress that achieving these targets is absolutely essential for NWR to thrive, provide prosperity to the region and deliver on its strategic goal of becoming Europe's leading miner and marketer of coking coal by 2017 in a safe and sustainable way. Our management team at OKD, led by Jan Fabian, has made huge progress in changing the nature of OKD, and although negotiations with our trade unions are still ongoing, there is a constructive dialogue as we progress discussions.
In line with our strategic targets, each mine is going to maximize its coking coal output. NWR's new mining plan is intended to be more flexible and selective. Longer term we envisage leveraging our customer relationships to complement our coking coal deliveries with suitable coking coal qualities from overseas. Last but not least, health and safety of our workforce remains our highest priority.
Our core market of Central Europe is a region that is reinforcing its position as the manufacturing hub of Europe, a trend that we believe will continue. Our focus on coking coal therefore remains and despite all the short-term difficulties and challenges that we currently face, we continue to work towards positioning NWR to become Europe's leading miner and marketer of coking coal by 2017.