13th May 2015 08:08
LONDON (Alliance News) - New World Resources PLC Wednesday said it swung to a pretax profit in the first quarter of 2015 despite revenue, sales and coal prices falling but said production is expected to ramp up throughout the year as it locks in better prices for the majority of its production.
The European coal producer swung to a significant pretax profit of EUR25.7 million in the first quarter from a EUR26.7 million loss a year earlier, as a decline in revenue was offset by a large rise in finance income.
Revenue in the quarter totalled EUR135.2 million compared to EUR172.5 million which halved gross profit.
New World reported EUR54.3 million in finance income in the period, mainly related to a non-cash gain on fair value revaluation of mandatory convertible notes, whilst administrative expenses fell to EUR15.4 million from EUR18.2 million and selling expenses dropped to EUR9.9 million from EUR15.6 million.
Production in the quarter fell 20% year-on-year to 1.8 million tonnes from 2.2 million tonnes, whilst coal sales fell 18% to 1.6 million tonnes from 1.9 million tonnes. Coking coal sales fell 20% in the period whilst thermal coal sales dropped 15%.
New World also achieved lower coal prices in the period, with coking coal falling 1% year-on-year to EUR90 a tonne from EUR91 a tonne and thermal coal prices dropping 7% to EUR56 per tonne from USD60.
New World's current sales mix consists of 64% coking coal and 36% thermal coal.
As production was higher than sales in the period, its inventory increased by 26% to 875,000 tonnes of coal at the end of March from 694,000 tonnes a year earlier.
For the rest of 2015, New World has hedged 74% of its coking coal production at EUR93 per tonne with thermal coal price agreements in place at EUR52 per tonne. Production in 2015 is expected to total 7.5 to 8.0 million tonnes and sales reaching 8.0 million tonnes with a sales mix of 60% coking coal and 40% thermal.
The company said it spent EUR15 million in capital expenditure during the period, which is up 24% from a year earlier as net debt at the end of the period stood at EUR278 million with cash of EUR84 million.
Total capital expenditure for 2015 will be in the region of EUR30 to EUR40 million.
"As these results clearly indicate, the market environment in which coal companies operate continues to be extremely difficult, and our business remains under pressure. However, as we move through the year our production rate is expected to increase while we remain fully focused on safety and cost management," said Chief Financial Officer Marek Jelinek.
New World shares were trading up 3.6% to 0.699 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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