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Net profit for 9 months exceeded PLN 1.1 billion

|   Investors Relations - common

In Q3 2011, the Jastrzębska Spółka Węglowa Capital Group generated PLN 590.1 million in net profit with revenues at PLN 2,500.6 million. These results are much better than the analysts’ expectations (the consensus forecast was PLN 566.7 million and PLN 2,428.8 million, respectively). Among the reasons for the achievement of such good results are persistently high prices of coal and coke on the international markets.

The favorable market conditions helped increase the Group’s revenues for three quarters to PLN 7,160.8 million, up 30.5 percent from last year. Operating profit for 9 months increased to PLN 1,584.3 million.

Despite the recent correction, the prices of coal and coke remain relatively high. The weakened Polish zloty also boosts the results generated by the Group as a large exporter. “I'm happy with the results, especially in light of our slightly lower sales volumes and the risks arising from the economic downturn,” says Jarosław Zagórowski, CEO of JSW S.A. “If the global crisis continues to deepen, then demand for coke and coal will diminish, leading to a further decrease in prices, which, unfortunately, will have a negative impact on our future results,” he adds.

The JSW Group’s revenues in Q3 alone were PLN 2,500.6 million (an increase by 4.5 percent compared to PLN 2,393.0 million in Q2). Between Q2 and Q3 2011, EBITDA increased by 310 percent – from PLN 233.9 million to PLN 959.0 million.

Total sales revenues for 3 quarters of 2011 in the coal segment reached PLN 6,107.4 million, up 35.6 percent compared to the same period of last year. These results are predominantly the effect of unit sale prices persisting at a level much higher than the historical average, optimization of the supply structure and a favorable macroeconomic environment. At the same time, the intra-Group sales of coking coal increased by 0.1 million tons (3.6 percent), which was driven, among other factors, by the acquisition of control over KK Zabrze by JSW S.A. on 29 June 2011. Even though the total deliveries of coal from JSW S.A. were 9.4 million tons (0.5 million tons less than in the same period of 2010), the share of sales of the highest quality and most expensive hard (type 35) coal in the total deliveries of coal from JSW S.A. increased (56.6 percent in 2010 and 59.8 percent in 2011). In the external sales of coking coal, type 35 accounted for 89.6 percent, i.e. 1.7 percent more than in the same period of 2010. The remaining 10.4 percent were sales of semi-soft (type 34) coal.

Compared to the three quarters of 2010, the production of coke in the period from January to September 2011 grew by 20.0 percent while sales grew by 15.0 percent. In the period under analysis, sales revenues in the coke segment, covering coke and coal derivatives, reached PLN 3,298.6 million, up 38.0 percent from the same period of 2010. Data for the period from January to September 2011 take into account the merger of KK Zabrze and JSW S.A.

 

The JSW Group is the largest producer of high-quality type 35 (hard) coking coal and a major producer of coke in the European Union in terms of production volume. The core business of the JSW Group is the production and sale of coking coal and steam coal as well as the production and sale of coke and coal derivatives. The coal, especially the coking coal, extracted by the JSW Group is used in Central Europe by local steelworks owned by international steel producers and regional utility companies. The high-quality coke produced by the JSW Group is also sold on the global market. The JSW Group sells the majority of its products to customers in Poland, Germany, Austria, the Czech Republic, Slovakia, Romania and Hungary.