LW Bogdanka Group after q1 2016: better financial results and improved profitability ratios
LW BOGDANKA GROUP AFTER Q1 2016: BETTER FINANCIAL RESULTS AND IMPROVED PROFITABILITY RATIOS
In Q1 2016, Lubelski Węgiel Bogdanka Group generated sales revenue on the level of almost PLN 420.6 mln, which were by 1.8 per cent lower than in the same period of the previous year. At the same time, the other key financial results improved: EBIT amounted to PLN 78.9 mln (growth by 63.8 per cent yoy), EBITDA PLN 173.3 mln (growth by 20.0 per cent yoy) and net result PLN 54.4 mln (growth by 66.6 per cent).
Generation of good results was possible due to flexibility of operations and consistent realisation of the optimisation of capital expenditures and cost reduction programme commenced last year. The cost of sold production was reduced by PLN 39.3 mln (i.e. 10.3 per cent) in relation to Q1 2015 and total production costs by PLN 24.8 mln (i.e. 6.4 per cent). As a consequence, profitability ratios improved. EBITDA margin was above average totalling to 41.2 per cent (against 33.7 per cent in the same period of the previous year). It is however worth mentioning that it was affected by the increase in the level of production and stock in Q1 2016. As a result, maintaining profitability ratios on such a high level in subsequent quarters seems very improbable.
In Q1 2016 commercial coal production reached the level of 2.3 mln tonnes (by 17.3 per cent more than on an annual basis) and sales 2.2 mln tonnes (growth by 12.2 per cent). The length of the performed corridor excavations performed in that period amounted to 6.4 km and was greater by 23.1 per cent as compared to Q1 2015. Total expenditures incurred for new excavations and modernisation of the existing ones totalled to almost PLN 44.8 mln.
Increasing production and sales of coal allowed Bogdanka to strengthen the market position in Q1 2016. The share in the supplies of the raw material to the commercial power industry in that period amounted to 25.5 per cent (in Q1 2015 it was 20.9 per cent, and in the whole 2015 22.5 per cent). The share in the fuel coal market grew to 15.8 per cent in general (against 14.3 per cent yoy and 14.4 per cent in the whole previous year).
The Company estimates coal sales in 2016 on the level of 8.5 - 9 mln tonnes.
In Q1 2016 the situation on the coal market remained difficult. Average prices of fuel coal dropped by 10.9 per cent as compared to Q1 2015 and prices of coal sold to the commercial power industry - by 11.5 per cent. The oversupply of coal continued on the Polish market together with high level of stock in mines and power plants. Bogdanka coped very well in these very unfavourable conditions due to a flexible response to the market situation and continuation of the cost and capital expenditure optimisation programme. |