Central Europe's leading coking coal producer, Czech-based New World Resources N.V. (NWR), has announced that, according to its preliminary and unconsolidated data, in Q1 2010 it posted a net loss of €14.5 million, while its sales grew by 37 percent year on year to €328.6 million.
The results reflect higher revenues driven by higher sales volumes of coking coal and coke compared to the first quarter of 2009.
In Q1 2010, NWR's coal output decreased by 12 percent year on year to 2.747 million mt, reflecting the high production volume recorded in Q1 2009. Coal sales to third parties increased by 30 percent due to improved market conditions in Q1 2010, allowing the company to reduce inventories by 126,000 mt in contrast to the inventory build-up of 820,000 mt seen in the same period of 2009. In contrast, coke output rose by eight percent to 251,000 mt, while coke sales rose by 171 percent due to better conditions in the market. Stockpiles of coke fell by 29 percent to 175,000 mt.
The net impact of financial expenses rose by 83 percent primarily as a result of currency effects. "The net loss was around €14 million, of which €13 million was due to the fluctuation of the Czech crown," NWR's CFO Marek Jelinek said.
However, NWR expects to post a profit again in the second quarter, mainly thanks to the higher coal and coke prices it has negotiated. "Coal markets generally continue to reflect the improving environment, with coking coal and coke in particular being causes for optimism. Mirroring other regions, steel production increases in Central and Eastern Europe have been strong and thus we maintain our positive outlook for the coal and coke markets," NWR's CE Mike Salamon said.
As SteelOrbis previously reported, in April 2010 NWR successfully negotiated new coal and coke prices, securing significant increases in prices, as well as more closely aligning pricing with the global coal markets. Thus, 80 percent of NWR's total expected coking coal sales were priced at a blended average of €163/mt for the Japanese fiscal year (JFY) 2010, with the remaining 20 percent being priced quarterly at an average of €135/mt for Q2 2010. Meanwhile, coke sales were priced at €255/mt for Q2 2010.
In 2010, NWR targets a production of 11.5 million mt of coal and 1 million mt of coke, while its total external sales are expected to amount to 10.5 million mt of coal, including 5.5 million mt of coking coal and 5 million mt of thermal coal.