21st Aug 2014 11:49
LONDON (Alliance News) - New World Resources PLC Thursday reported a 20% drop in first-half revenue, hit by a sharp fall in thermal coal sales and coking coal prices, although the company said its net loss narrowed after last year's result was hit by big impairments.
The Europe-focused coal producer posted a net loss of EUR57 million in the six months to June 30, compared with a loss of EUR400 million in the first-half of 2013 when the company booked a EUR307 million impairment due to price falls.
The company also managed to rein in losses as it kept a tight lid on costs, having reduced cash mining unit costs by 24%, and selling and administrative expenses by 27%.
Revenue in the first-half fell by 20% to EUR346 million, down from EUR434 million a year earlier, hit by lower sales volumes of thermal coal and lower coking coal prices.
The company said it was hit by a 15% fall in the average realised price of coking coal to EUR87 per tonne, although this was slightly offset by a 4% rise in the average realises price of thermal coal to EUR58 per tonne.
Coal production in the first-half was up 5%, although coal sales were down 17%. It said the coal sales mix in the first half comprised of 63% coking coal and 37% thermal coal, although the company is targeting a sales mix of between 55% to 60% coking coal for 2014.
New World Resources said it is still targeting between 9 million and 9.5 million tonnes in terms of production and sales volume for 2014.
It said the average coking coal price agreed in the third quarter was up 1% on the previous quarter at EUR85 per tonne. It also said an average price of EUR54 per tonne has been agreed for thermal coal production in 2014.
New World Resources, which is trying to drive down costs and streamline the business, said it expects to complete its capital restructuring process in October.
"The restructuring process will strengthen our balance sheet as not only will there be a significant reduction in the levels of outstanding debt, and hence debt servicing costs, but will position NWR [New World Resources] to benefit all stakeholders when there is an upturn in market conditions," said Chairman Gareth Penny in a statement.
It said that as at June 30, EUR10 million of the expected EUR30 million in costs associated with the process were booked.
As the company focuses on capital restructuring, it reduced the level of capital expenditure in the first half by 71% to only EUR24 million. It said it expects to invest less than EUR100 million in capex for the full year.
At the end of the half year, the company said it had net debt of EUR688 million, including cash of EUR122 million.
Shares in New World Resources were down 5.7% Thursday midday, at 9.90 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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