Solid nine months, but cautious outlook
On November 16th, NWR Group announced its results for the nine months of 2011, which on the operational side were fully in line with market expectations. The results continue to show strong improvement year on year, with 10% growth in revenues and 22% growth in EBITDA supported by favourable regional demand dynamics in the period and increased coal prices. Crude steel production in our customer markets in the first nine months of this year was 5% above the comparable period in 2010.
Uncertainty in the macroeconomic environment is however significant and has further increased in recent months as markets impatiently await resolution of the various European sovereign debt crises. We are aware that our customers are exercising increased levels of prudence in light of these events, and we remain cautious on the near term volatility this may have to our business.
Notwithstanding this uncertainty, we are on track to produce 11Mt of coal this year and to sell externally 10.3Mt of coal. We expect our coal sales mix to be 44% coking coal, 4% PCI coal and 52% thermal coal as previously guided. Notably, our prices remain in line with international prices both for hard and semi-soft coking coal in the fourth quarter. We continue to successfully mitigate input cost inflation and the 6% increase in our year-to-date mining unit costs (excluding effects of foreign exchange) is in line with previous guidance.
The consolidated profit for the period was EUR 121 million. Excluding the one-off EUR 82 million gain on the sale of the energy business and the tax refund of EUR 22 million in the previous year, consolidated underlying profit for the period more than doubled from EUR 59 million in the nine-month period of 2010.
Our plans for Debiensko are progressing well and we officially broke ground (by way of a box-cut for one of the two planned slopes) on 3rd December. The project represents a significant milestone, not only for the Company and its growth strategy, but also for the region, as Debiensko will be the first mine to be opened in the Upper Silesian Coal Basin in two decades. We have employed a top international team to ensure successful execution of this project. First coal production is anticipated in 2017. The long-term supply and demand dynamics of the region support additional supplies of Debiensko quality coal into the area.
We have recently announced our intention to further explore the hard coal deposit associated with the Frenstat Mine site in the northeast of the Czech Republic. This resource is estimated at approximately 1.5 billion tonnes of coal. The exploration process is expected to take four years to complete, after which NWR will decide on the feasibility of developing the resource.
We are currently in negotiations with our customers for 2012 thermal coal sales and we see some upside in regional thermal coal prices compared to 2011. We will update the market in due course on the result of our negotiations.
Safety is our upmost priority and our safety metrics continue to show positive trend. This is largely due to major investments in state-of-the-art equipment, personal protective gear and safety training, together with a great deal of dedication and skill from all of our employees.
Mike Salamon, Executive Chairman of NWR concluded: “This year is shaping up to be the second best year in NWR’s history. We continue to deliver strong operating and financial results whilst pursuing our growth plans. Hence we remain confident about the long-term attractiveness of our business.”
Director of Investor Relations