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Lubelski Węgiel
Lubelski Węgiel Bogdanka S.A.

BOGDANKA after 2013 – higher extraction and very goog financial results

Thursday, 2014-03-20

Bogdanka, 20 March 2014



PRESS RELEASE


LW BOGDANKA S.A. AFTER 2013 – HIGHER EXTRACTION AND VERY GOOD FINANCIAL RESULTS DESPITE HARSH MARKET CONDITIONS

 

The Lubelski Węgiel BOGDANKA Group, with its Parent – Lubelski Węgiel BOGDANKA S.A., the most modern and efficient hard coal mine in Poland and domestic leader on the market of power coal producers, generated very good financial results in 2013. The revenue amounted to PLN 1.9 billion (up by 3.49%), EBITDA amounted to PLN 754.9 million (up by 9.42%), and EBIT – PLN 424.8 (up by 9.14%). Net profit reached the figure of PLN 329.7 million (up by 6.7%).

In 2013, the level of commercial coal production reached 8.35 million tonnes, which means it was higher by 7.20% than a year before and the highest in LW BOGDANKA’s history. It was also slightly lower from what the Company expected, as a consequence of difficult geologic conditions in the fourth quarter 2013. The achieved extraction level and the realised sales translate into a strong market position of the Company. As at the end of 2013, LW BOGDANKA’s share in the power coal market in Poland reached 14.79%, and the share in sales of power coal to the commercial power industry was 19.32%.

LW BOGDANKA plans to increase the extraction of commercial coal in 2014 by at least 1 million tonnes compared to 2013, to 9.3-10 million tonnes. According to the Company’s assessment, however, the situation of the mining industry in 2014 will be very demanding.

The Company is focused on implementing its strategy for 2013-2020 announced in June 2013, whose key assumptions include completion by 2015 of the investment programme with a view to doubling the extraction compared to 2011 and a two-fold increase in the Company’s operating resources in the Lublin Coal Basin, and thus extension of the mine’s operating life to around 2050.


FINANCIAL RESULTS - DETAILS

Selected financial data of the LW BOGDANKA Group after the fourth quarter of 2013 is presented in the table below:

PLN '000 Q4 2013 Q4 2012 Change 2013 2012 Change
Revenue 481 531 443 561 8,56% 1 899 830 1 835 801 3,49%
Profit on sales 125 169 61 034 105,08% 455 799 395 400 15,28%
Gross margin on sales 25,99% 13,76% 88,88% 23,99% 21,54% 11,37%
EBITDA 206 600 120 182 71,91% 754 941 689 958 9,42%
EBITDA margin 42,90% 27,09% 58,36% 39,74% 37,58% 5,75%
Operating profit (EBIT) 117 244 48 439 142,04% 424 803 389 217 9,14%
EBIT margin 24,35% 10,92% 122,99% 22,36% 21,20% 5,47%
Net profit for the financial year 104 995 35 334 197,15% 329 728 309 016 6,70%
Net margin 21,80% 7,97% 173,53% 17,36% 16,83% 3,15%

        
In the fourth quarter of 2013 the revenue obtained by LW BOGDANKA reached PLN 481.53 million, so it was higher by 8.56% than a year before. In the entire 2013, the sales amounted to PLN 1.9 billion and were higher by 3.49% than in the previous year, and record-breaking in LW BOGDANKA’s history.

Approximately 85% of coal sales (in terms of value) during 2013 were carried out, as in the previous year, on the basis of long-term trade agreements concluded between LW BOGDANKA S.A. and its key customers, i.e. Elektrownia Kozienice S.A., GDF Suez Energia S.A., PGNIG Termika S.A., Zakłady Azotowe Puławy S.A., EDF Paliwa Sp. z o.o. and Elektrownia Ostrołęka S.A.

Gross profit on sales reached PLN 455.8 million in 2013, which means an increase by 15.28%. The gross margin for 2013 equalled 23.99% and it was higher than in 2012 (21.54%) despite unfavourable trends on the market. Such result was possible due to consistently followed costs control policy.

 

COAL PRODUCTION AND SALES

In Q4 2013, the level of commercial coal production at the Company increased by nearly 23% compared to the same period a year before, reaching 2.1 million tonnes. The production of commercial coal in the entire 2013 amounted to 8.35 million tonnes, which translates into a year-to-year increase by 7.2%. It was the highest production level in LW BOGDANKA’s history. However it was slightly lower than expected, which was a result of worse geological conditions in the fourth quarter on one of the mined walls (the wall closing seam 382) and worse than expected parameters of the deposit in the Stefanów Field wall launched in November 2013.

The level of output in the fourth quarter amounted to 66.38% (compared to 61.67% in the fourth quarter of 2012). In the entire 2013 the level of output was 68.49% against 68.58% in 2012. 

The sales in 2013 was in line with the customer delivery schedules and reached a level of PLN 8.15 million tonnes, i.e. by 4.51% higher than that recorded in the previous year.

The Company continuously performs works with a view to making new excavations available:
•    In the fourth quarter of 2013, the Company completed 7.4 kilometres galleries compared to 6.56 kilometres a year before (increase by 12.77%)
•    In 2013, the Company completed 28.62 kilometres galleries compared to 23.25 kilometres in the same period of the previous year (increase by 5.36 kilometres, i.e. 23.07%)

Inventory of coal standing at a level of 216,440 tonnes at the end of 2013 corresponded to ca. eight days of commercial coal production by the Company and was in line with its assumptions.


STRATEGY

In June 2013 the Company announced development strategy for 2013-2020. Its key assumptions include completion by 2015 of the investment programme with a view to doubling the extraction compared to 2011 and a two-fold increase in the Company’s operating resources in the Lublin Coal Basin, and thus extension of the mine’s operating life to around 2050. As a result of increasing the extraction, the Company’s intention is to reach a share of 20% in the market of power coal sales in Poland by 2015.

LW BOGDANKA also wants to remain the leader of efficiency in the mining industry, among other things by constructing a “smart mine”. It will be possible owing to continued development of the coal deposits management system and further application of information technology and automation solutions for the production process in the Company. Combined with continuous improvements in organisation of work and development of outsourcing, this should result in lowering the unit mining cash cost by 15% to 2017 (in real terms).
 

Zbigniew Stopa, President of the Management Board of LW BOGDANKA S.A.:
“I believe 2013 was a good year for our Company. Despite a difficult situation in the mining industry in Poland, we generated the record-breaking level of coal production and sales at LW BOGDANKA. Our financial results were also very good – revenue was close to PLN 2 billion, and net profit reached approx. PLN 330 million. According to our estimations the level of commercial coal production in 2014 will be higher by at least 1 million tonnes compared to 2013 and may reach 9.3-10 million tonnes. Observing the market we assess 2014 may also be difficult for the industry, we expect decreases in an average coal price against the price of 2013. Therefore we consistently pursue our strategic goals which include further improvement of efficiency and cost control, which is particularly important in the demanding market conditions.”

 



For further information please contact:
Magda Kołodziejczyk, M+G
tel. (22) 416 01 02, 501 16 88 07
e-mail: magda.kolodziejczyk@mplusg.com.pl  

 

LW BOGDANKA – HIGHLIGHTS

Lubelski Węgiel Bogdanka S.A. is the most advanced and one of the largest hard coal mines in Poland and a leader of the domestic market for power coal producers. In 2013, production of Bogdanka’s commercial coal amounted to 8.35 million tonnes.  
 
LW BOGDANKA conducts primarily mining operations with respect to extraction, agglomeration and sale of hard coal.  
 
First and foremost, BOGDANKA coal mine supplies industrial customers based in East and North-East Poland. Customer market is stable and sales are conducted mostly on the basis of long-term agreements. The major directions of sale of commercial coal from LW BOGDANKA are commercial and industrial power sectors.  
 
The Company stands out in the industry with regard to its financial results, efficiency of hard coal extraction and investment plans. LW Bogdanka employs approx. 4,700 staff.
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For further information visit www.bogdanka.eu
 

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