JSW’s coal production in Q1 2015 was over 3.6 million tons. As a result of the strike, it fell by one-sixth from the quarter before. In March however, after intensification of the mining work, the company returned to record high monthly (over 1.5 million tons) and daily (69 thousand tons) production levels.
Despite the low coking coal prices, in Q1 the Company managed to maintain sales levels similar to those in Q4 2014. In the three first months of the year, sales fell by only 7 percent from the preceding quarter. Total coal sales to external customers exceeded 2.6 million tons. As a result, coal inventories were reduced to 994.6 thousand tons at the end of March of this year from 1259.1 thousand tons at the end of December 2014.
In line with the assumptions of the liquidity improvement program, capital expenditures were reduced throughout the Capital Group in the first quarter of the year. At PLN 263.2 million, they were 49,9 percent lower than in the preceding quarter.
- “As a result of the losses that resulted from the strike and the disadvantageous macroeconomic environment, we have been implementing a deeper restructuring program. We have put emphasis on a significant reduction of operating expenses to restore the Group’s profitability. The agreement with the trade unions has allowed us to make savings also in relations with our employees.” – said Edward Szlęk, President of the JSW Management Board. – “We are focusing on the production of hard coal, on which we earn highest margins and which remains in demand in Poland and abroad. We have adjusted JSW’s investment policy to support this objective”.
Despite the extraordinary circumstances in the first quarter, which included the strike causing a long-lasting interruption in production and financial losses and given the payment of part of the 14th salary, the balance of JSW’s cash and short-term investments at the end of March was almost PLN 570 million. Therefore, the reduction in cash was much lower than it was in the previous quarter and further cost cuts should effectively support the Group’s liquidity.
The Company is considering procuring external partners to co-finance undertakings with a high rate of return, i.e. in the Budryk and Knurów-Szczygłowice mines and construction of the Bzie-Dębina shaft.
The company’s Management Board intends to recommence the campaign of encouraging retirement of those employees who already acquired retirement rights; this measure, combined with the freeze on hiring for any positions not directly related to coal production, should create additional savings. The Company has been radically reducing all expenditures unrelated to its core business.