Bloomberg News

NWR Reports Fourth-Quarter Loss on Low Coal Prices, Poor Demand

February 21, 2013

New World Resources Plc (NWR), the biggest producer of coking coal in the Czech Republic, reported a fourth-quarter loss as prices of the commodity fell and an economic slump forced steelmakers to cut production.

The net loss in the three months through December was 48.6 million euros ($64.5 million), compared with 8.8 million-euro profit reported a year earlier, the Amsterdam-registered company said today in a statement. That missed the median estimate of nine analysts for a 35 million-euro loss in a Bloomberg survey.

Europe’s debt crisis has damped demand for coking coal as steelmakers such as ArcelorMittal (MT) brace for slowing economic growth. NWR reduced its full-year sales target in October as global metallurgical-coal prices have tumbled on a manufacturing slowdown in China.

“2012 was a tough year for NWR,” Chairman Gareth Penny said in the statement. “The ongoing macroeconomic uncertainties in Europe as well as the slowdown in Asia have affected business sentiment and this had a knock-on impact on steel markets and associated raw materials including coking coal.”

NWR expects coking coal prices to continue improving during 2013 after a “slight” up-tick in the first quarter this year as significant volumes of less competitive global coking coal supply went off line in 2012 and projects that would have brought new supplies on stream in the long-term were delayed or abandoned, the company said in the statement.

Business Plan

Over the next five years, NWR plans to reposition the business to become “Europe’s leading miner and marketer of coking coal,” it said. By 2017, NWR plans to double the European coking coal sales to 10 million tons per year, it said.

NWR also plans to expand the company’s sales “opportunistically” to western Europe, while retaining Central Europe as NWR’s core market, it said.

Fourth-quarter revenue fell 27 percent to 286.6 million euros, the company said. The miner posted an operating loss of 40.8 million euros, after a 40.7 million-euro profit a year earlier.

NWR sees 2013 coal production target at 10 to 11 million tons and coke production target of 800 kilotons.

The average coal price fell 24 percent last year and 13 percent in the fourth quarter, according to Erste Bank AG analyst Petr Bartek. Volumes of coal sold fell 4.4 percent last year, he said in a Feb. 15 note.

NWR owns four mines and two coking facilities in the Czech Republic and sells to customers in central Europe, including the Czech unit of ArcelorMittal, the world’s largest steelmaker.

The company is reviewing its plan for the Debiensko mine in Poland where it encountered unexpected technical difficulties. Jastrzebska Spolka Weglowa SA (JSW), Poland’s largest coal producer, is looking at the Debiensko project, Chief Executive Officer Jaroslaw Zagorowski said on Feb. 14.

To contact the reporter on this story: Ladka Bauerova in Prague at lbauerova@bloomberg.net

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net; Wojciech Moskwa at wmoskwa@bloomberg.net


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