In 2011 the Company recorded a very good financial result thanks to coal and coke prices remaining at a relatively high level coupled with PLN depreciation in the second half of the year. This result was generated with a slightly lower sales volume associated with production being suspended as a result of incidents in two of the Company’s mines and in the face of significant uncertainty in the steel markets resulting from the economic slowdown in Europe.
“For us, 2011 was a period which positively vetted our development strategy. Despite events beyond our control associated with lower production in the first half of the year and price erosion in the second half of the year, we generated a very robust result. At the same time we had several one-off events associated with the release of provisions exerting an impact on our final result.” says Jarosław Zagórowski, JSW S.A.’s CEO and adds “This year the volatility risk in the steel market is still high. What the demand for coke and coal will be is unknown and thus – whether we will face a major price decline threat. We have to take into account all signals generated by the market and respond accordingly so that they don’t impact our results in any material way.”
The JSW Group’s sales revenues in 4Q 2011 amounted to PLN 2,216.0 million, exceeding 4Q 2010 by more than 22% (PLN 1,802.6 million). EBITDA amounted to PLN 1,394.3 million in 4Q 2011. That is a 107% increase in comparison to the corresponding period of 2010 when this figure was PLN 673.2 million. Net profit in 4Q 2011 totaled PLN 998.1 million, compared to PLN 368.3 million in the corresponding period of the year before.
Total revenues on coal sales to external buyers after four quarters of 2011 were PLN 4,943.3 million and were 22.8% higher than in the corresponding period of 2010. Although JSW’s total deliveries to external coal buyers were slightly lower than in 2010, a higher average sales price was obtained, especially for coking coal.
In comparison to the four quarters of 2010, coke production from January to December 2011 grew 18.8%, with one of the drivers being the integration of KK “Zabrze” S.A. Sales measured in tons in the same period increased 20.2%. Coke sales revenues to external buyers in 2011 amounted to PLN 4,220 million and were 37.7% higher than in 2010.
In 2011 the Company earmarked nearly PLN 1.5 billion for investments. This is nearly 60% more than in 2010. The investments are associated with ensuring coal extraction from new seams, introduction of additional technical solutions to improve safety during extraction of coal from seams exposed to the methane explosion hazard, and consolidation of the Group’s segments. Most of these investments will be continued in the upcoming years.
The JSW Group is the largest producer of high quality hard coking coal and a significant producer of coke in the European Union in terms of production volume. The JSW Group’s core business is producing and selling coking coal and steam coal and producing and selling coke and hydrocarbons. The coal produced by the JSW Group, primarily including coking coal, is used in Central Europe by local steelworks owned by international steel producers and regional public utilities. The high quality coke produced by the JSW Group is also sold on the global market. The main buyers of JSW Group’s products are customers from Poland, Germany, Austria, the Czech Republic, Slovakia, Romania and Hungary.