24th Feb 2015 08:15
LONDON (Alliance News) - New World Resources PLC Tuesday said it swung to a profit for the year after restructuring its finances, despite revenue and production falling in 2014.
For the year ended December 31, the coal and coke producer reported earnings before interest, tax, depreciation and amortisation from continuing operations of EUR11 million, swinging from a GBP10 million loss in 2013.
The miner said it had recorded EUR183 million in impairment charges against property, plant and equipment in 2014, and a EUR342 million non-cash gain from capital restructuring.
This led to a pretax profit of EUR25.2 million for the period, swinging from a EUR1.06 billion pretax loss in 2013, and a loss after tax of EUR21.1 million from a EUR914 million loss.
"The key event of the year was the successful restructuring of our balance sheet... this has placed New World on a much firmer and more sustainable financial footing to better withstand prevailing market coal prices that remain depressed, a period of market weakness that is unprecedented in terms of both its length and severity," said Executive Chairman Gareth Penny.
At the end of the year, New World recorded a cash balance of EUR128 million and net debt of EUR281 million, which has been reduced from EUR625 million at the end of 2013.
Revenue in 2014 fell significantly to EUR676 million, down 20% from EUR850 million a year earlier, reflecting the fall in commodity prices and slight reductions in production for the year.
"The low pricing environment was clearly reflected in our revenues for the year, which were down by 20%. A further challenge has been that as we mine deeper the geological conditions become more challenging in terms of seismic risks, and this will naturally impact our future coal production," said Penny.
Coal production totalled 8.6 million tonnes for the year, down 2% from 8.8 million tonnes, whilst coal sales fell by 14% to 8.3 million tonnes from 9.7 million tonnes. Of the coal sales, coking coal saw a 3% increase, offset by a 30% fall in sales of thermal coal during the period.
As a result of weaker sales during the year, the company's coal inventory has increased by 76% from 2013 to 668,000 tonnes of coal.
In 2015, the company is expecting coal production to hit between 7.5 million to 8.0 million tonnes, said the company.
In 2014, the miner achieved an average coking coal price of EUR85 per tonne, down 13% from 2013 and EUR54 per tonne for thermal coal, which represents a 4% fall from a year earlier.
New World said the average price for 74% of its expected coking coal production in 2015 will be fixed at a price of EUR93 per tonne, which would be a 9% increase from 2014, whilst all of the company's expected thermal coal production will be sold at a fixed price of EUR52 per tonne, which is down 4% from the 2014 average.
"As I write, I can report that we have reached stable agreements with all of our key customers for 2015, at average prices of EUR93 and EUR52 for a tonne of coking coal and thermal coal, respectively," said Penny.
In 2014, the company spent EUR60 million in capital expenditure, which is down 45% from 2013 and New World has slashed its budget further in 2015 to only EUR30 to EUR40 million, it said.
"With no imminently visible upturn in global coal prices, it is crucial that we continue to look at ways in which we can drive down costs and optimise our operations still further," said Penny.
The chairman added that he "remains confident" that New World can become "Europe's leading miner and marketer of coking coal by 2017."
By Joshua Warner; [email protected]; @JoshAlliance
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