Coal news and updates

NWR Reports Operating Loss in ‘Extremely Difficult’ Coal Market

New World Resources Plc, the largest Czech producer of coking coal, reported an operating loss in the first quarter as sluggish demand weighed on prices.

The loss widened to 13 million euros ($14.6 million) from 8 million euros a year earlier, the company said Wednesday in an e-mailed statement. It also posted a loss before interest, taxes, depreciation and amortization of 2 million euros.

A global glut has dragged down prices of coal, with the coking variety used by steelmakers sinking to a record low in April. The commodity has been hurt by slowing industrial demand in Asia, while coal used by power plants is facing pressure from low-cost natural gas and tougher emissions standards.

“The market environment in which coal companies operate continues to be extremely difficult and our business remains under pressure,” Chief Financial Officer Marek Jelinek said in the statement. “However, as we move through the year our production rate is expected to increase.”

Coal production dropped 20 percent to 1.8 million metric tons in the quarter. The company reiterated its target for 2015 output of 7.5 million to 8 million tons of coal, with coking coal making up 60 percent of the total.

NWR, which last year restructured its borrowings to avoid bankruptcy, reported net debt of 278 million euros as of March 31. Cash and cash equivalents slumped 47 percent to 84 million euros.
Cost Surprise

“Investors may negatively view further deterioration of the company’s cash position,” Bohumil Trampota, an analyst at J&T Banka in Prague, said in a note. “The positive surprise is lower operating costs.”

Selling and administrative expenses fell 25 percent in the quarter.

Analysts were also surprised by NWR’s return to net income after it booked a 49 million-euro gain from revaluating its bonds.

The 26 million-euro net result compared with a net loss of 27 million euros a year earlier. Analysts had expected a 32.7 million-euro loss, according to the average of six estimates compiled by Bloomberg.

The Amsterdam-registered company is in early talks with potential investors to refinance a 35 million-euro loan facility, according to the statement.

source: http://www.bloomberg.com