• EBITDA (operating profit plus depreciation) net of the costs of the employee share program grew in 1H 2011 by 53.7% to almost PLN 1.8 billion from more than PLN 1.1 billion one year ago, while the EBITDA margin was 37.8% and 33.1%, respectively. These figures, after incorporating the one-off event of the issue of series C shares to employees without consideration were PLN 1.2 billion plus and 26.3%, respectively.
• The net earnings for the parent company’s shareholder fell by 3.3% from PLN 519 million in 1H 2010 to PLN 502.1 million in 1H 2011.
• The robust market context was confirmed by the high price levels achieved for coal and coke in 1H 2011 and Q2 2011.
• 30% growth of capital expenditures in cash to PLN 493.4 million in 1H 2011 encompassing expenditures to acquire tangible non-current assets worth PLN 487.7 million and intangible assets worth PLN 5.7 million; the announced investment projects in progress; the cost effectiveness programs underway.
• JSW’s active participation on the M&A market: initialing the share purchase agreement for Wałbrzyskie Zakłady Koksownicze Victoria with the State Treasury Ministry and submitting a proposal to acquire PEC in Jastrzębie-Zdrój.

-We can certainly consider the most recent quarter and the entire first half of the year as successful. The market conditions in the coking coal and coke sector continue to be very robust, as reflected by the prices, production and sales volumes achieved by JSW. This has in turn translated into a satisfying level of revenues and earnings -– says Jarosław Zagórowski, CEO of JSW. – We are implementing our primary strategic assumptions in line with our plan. We are working intensively in many areas of the Group with the purpose of enhancing our operating efficiency while growing coal and coke production. We are pursuing numerous initiatives related to organic growth and acquisitions. Work is in progress in our mines to extend the utilization of our resources. We are also considerably closer to acquiring the Victoria Coking Plant, which would not only strengthen our coking segment, but would also enable us to diversify our operations by penetrating the foundry coke market, a new area for us.

* does not incorporate KK Zabrze

Revenues
In 1H 2011 the JSW Group recorded revenues of nearly PLN 4.7 billion, signifying nearly 34% growth compared to 1H 2010 when the Group generated revenues of almost PLN 3.5 billion. Higher revenues primarily stem from higher sales revenues in the coal segment (up by more than 41% to PLN 2.6 billion) coupled with higher sales revenues in the coke segment (up by more than 27% to roughly PLN 2.0 billion). The slightly lower volumes of coal and coke produced in 1H 2011 were more than compensated for by the higher price level commanded by the JSW Group in 1H 2011 in both segments. The lower volumes primarily resulted from curtailed coal production caused by the accident in May in the Krupiński mine and the necessity of closing one of the longwalls in the Jas-Mos mine.

 - JSW is in a very robust financial position. This makes it possible to look into the future with optimism in the context of the planned investments whose value should grow in the upcoming quarters. We are also very well prepared for tougher times and a downturn in economic conditions if they should occur. In the upcoming quarters we anticipate that the demand for steel will be stable, and as a result, so will the demand for coking coal and coke be - remarks Marek Wadowski, JSW’s CFO.

EBITDA and net earnings

The JSW Group’s EBITDA (operating profit plus depreciation) (net of the costs of the employee share program) was nearly PLN 1.8 billion in 1H 2011, signifying 53.7% growth compared to PLN 1.1 billion generated in the same period one year ago. The EBITDA margin (net of the costs of the employee share program) was 37.8% compared to 33.1% in the comparable period. The costs of the employee share program are not expenditures and were incurred on a non-recurring basis in Q2 2011, which contributed to reducing the level of the Group’s results by PLN 536.9 million. EBITDA including the employee share program topped PLN 1.2 billion, signifying 6.8% growth compared to 1H 2010.

In 1H 2011 JSW recorded a decline in net earnings for the parent company’s shareholder. In 1H 2011 the net earnings for the parent company’s shareholder fell by 3.3% to PLN 502.1 million. This result would have been higher had it not been for the costs of the issue of the series C shares, which reduced it by PLN 536.9 million.

The robust market situation and the high price level which continue to be present coupled with JSW’s firm policy of enhancing efficiency and cutting costs enabled it to preserve its high operating profitability and form an excellent sign for subsequent quarters in which JSW does not anticipate incurring such substantial costs as the ones associated with the issue of the series C shares. 

Additional information about the JSW Capital Group

The JSW Group is the largest producer of high quality hard coking coal and a significant coke producer in the European Union.

• JSW’s coking coal is primarily used to produce coke, which next to iron ore is the primary input raw material to produce steel.
• The Company also produces steam coal which is primarily sold to power plants and combined heat and power plants.

JSW consists of five black coal mines: Borynia-Zofiówka, Budryk, Jas-Mos, Krupiński and Pniówek in which coking coal and steam coal are mined. The largest companies in the JSW Capital Group include Koksownia Przyjaźń and Kombinat Koksochemiczny Zabrze whose main line of business is to produce coke.

JSW’s mines have coal reserves of approximately 552 m tons but the Group intends to expand its resource base, which should enable JSW to retain its strong position on international coal markets for the next 60 years.

JSW’s mining area is situated in the Lower Silesian Coal Basin. The Group’s products are sold to customers in Poland, Germany, Austria, the Czech Republic, Slovakia, Romania and Hungary. The largest external customers of the coking coal offered by the Group are ArcelorMittal Poland, U.S. Steel Kosice, Węglokoks, Voestalpine Stahl, Wałbrzyskie Zakłady Koksownicze Victoria, Koksownia Częstochowa Nowa and Moravia Steel. Next to external customers the largest amount of the coal sold by the Group is delivered to Koksownia Przyjaźń for the Group’s coking operations.

JSW’s strategy calls for exploiting new coal beds at lower depths in existing mines (vertical expansion), accessing deposits in the areas adjacent to current mining operations (horizontal expansion) and searching for new deposits. The Group intends to continue strengthening its position as a merchant coker on the EU and global markets while expanding the production capabilities of its coking plants and increasing the utilization of the by-products of coal mining. JSW is also taking actions to streamline the Group’s operations and enhance safety.

Contact us if you have any questions:

Łukasz Wójcik
NBS Communications

tel: 22 826 74 18
e-mail: [email protected]