New World Resources sees first quarter revenue plunge by a third

New World Resources (NWR) has revealed that first quarter revenue dropped by almost a third, in what has been an 'extremely difficult' period for the mining company.

New World Resources (NWR) has revealed that first quarter revenue dropped by almost a third, in what has been an 'extremely difficult' period for the mining company.

During the first quarter, revenues fell 31% from 347m euro to 240m euro, pushing the group into a loss of 80m euro for the period (Q1 2012: profit 6.0m euro).

The group has revised its 2013 operational targets to 9-10m tonnes or coal and 800,000 tonnes of coke.

It expects to sell around 700,000 tonnes of coke and has an external sales target of 8.5-9.5m tonnes of coal, equally split between coking and thermal coal.

Global coking coal markets have suffered a deterioration since mid-2011, with the Australian HCC average spot price falling by more than 50% to less than $160 per tonne.

As the group explained, "such price developments affect the whole industry and for many of our competitors these pricing levels have become unsustainable".

Chairman detailed the company's reaction to this: "We believe that a number of European economies will need to go through further major fiscal adjustments, and this will weigh on economic growth going forward.

"Given the negative effect of these external developments on NWR's financial and operational performance, the management has decided to take aggressive but necessary steps to ensure the stability of current operations, and position NWR for delivery of its strategic plans.

"The immediate steps include 100m euro-worth of short-term measures to fortify NWR's financial position including among others an immediate 10% group-wide cut in salaries, additional capital expenditure savings and deferrals, the sale of thermal coal inventories, and active working capital management. Waivers recently negotiated for financial covenants in our bank facilities give us sufficient comfort, and we can fully focus on execution of these measures."

Looking ahead to the second quarter, the average coking coal price has been agreed at 104 euro per tonne, and 246 euro per tonne for coke.

Capital expenditure is expected to total 100m euro, of which 10m has been budgeted for the Debiensko project.

NR

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?
Bitcoin

“Joke” cryptocurrency dogecoin goes to the moon. What’s going on?

Dogecoin – a cryptocurrency created as a joke – has risen by more than 9,000% this year alone. Saloni Sardana looks at how something that began as an …
19 Apr 2021
Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021