Jastrzębska Spółka Węglowa’s mines produced 7.77 m tons of coal, with a split of 5.47 m tons of coking coal and 2.3 m tons of steam coal in H1. The full year plan for 2015 calls for producing 16.4 m tons of coal. Last year JSW’s mines extracted 13.9 m tons of coal, but it should be noted that the Knurów-Szczygłowice mine did not join the company until 1 August 2014. However, on the other hand, the interruption in coal mining operations caused by the industrial action in Q1 2015 persisted for more than 2 weeks.
The relatively high volume of production in the first half of this year coupled with the savings being steadfastly implemented have contributed to slashing the mining cash cost by 16.3% compared to the same period one year ago, bringing it down to PLN 325 a ton. It was PLN 306 a ton in Q2 2015.
Unfortunately, despite significant reduction of unit mining cash cost JSW capital group’s H1 net result was minus PLN 623.5 million, mainly due to drop in prices and an impairment charge.
The average sales price for JSW’s flagship product, namely coking coal, to external customers fell in H1 2015 by 5.8% on an annual basis to PLN 401.21. Nevertheless, the upswing in the volume of coal produced and sold, driven inter alia by the acquisition of the Knurów-Szczygłowice mine contributed to the JSW Group’s revenues growing in the period from January to June 2015 by nearly 12% to PLN 3.502 billion.
Operating profit plus depreciation and amortization (EBITDA) in H1 2015 was PLN 15.0 million versus PLN 196 million one year ago. However, operating profit was encumbered mainly by an impairment loss of PLN 211.2 million for the Krupiński mine. The smoothed EBITDA in H1 2015 shot up to PLN 329.4 million from PLN 171 million one year ago.
JSW Group – aiming to secure financial liquidity – alongside with reduction of costs has curbed investment spending by focusing on coking coal production. Capital expenditures in H1 2015 plunged by 28% yoy, coming in at PLN 553.1 million. Capital expenditures have been sustained mainly for those projects that directly contribute to elevating coking coal production.
“Our overriding objective while facing these extraordinarily unfavorable market conditions is to cut expenses permanently and focus on the most growth-oriented operating areas, meaning coking coal production. Our low cost base affords us an opportunity to take advantage of even a slight retracing of prices on the coking coal market”, said Robert Kozłowski, JSW’s CFO and Vice-President for Economic Matters.
JSW’s balance of cash and short-term deposits at the end of June 2015 was PLN 545 million and in comparison to the end of March 2015 it fell by only PLN 25 million.
The company continues to pursue restructuring efforts: it is radically cutting all expenditures unrelated to its core business while also conducting a review of assets unrelated to its core business.
The company’s management board is encouraging employees who have already acquired retirement rights to retire. This measure, coupled with strict limits on hiring for all positions has already accrued specific savings. Within six months the employment status in JSW decreased by 1,200 people.