New World Resources hit hard by lack of demand

New World Resources saw a big drop in revenues and profits over the first nine months of the year as it was hit by floundering demand in steel markets.

Revenues dropped 18% to €1.01bn with pre-tax profits coming in at €67.5m, down 59% on the previous year's figure.

In the third quarter revenue was down 21% to €318.7m, while profits slumped 58% to €19.1m.

The the Czech Republic-focused miner said steel production in Central and Eastern Europe had remained relatively resilient, but demand for steel products has deteriorated, particularly in the car industry in Western Europe.

This forced some steel mills and foundries in its core markets to continue operating at reduced levels.

This weakness in the steel industry was having a knock-on effect on steelmaking input raw materials including coking coal, New World said.

This was reflected in pricing for the final quarter of 2012, with blended coking coal contracts at €102 per tonne, down 20% on the previous quarter.

The firm's average coke price was down 8% on the third quarter at €264 per tonne.

"In an environment where coking coal prices are 30% down year-on-year, our focus will remain on cost containment and watchful management of capital spending in order to ensure we are well positioned for the future," said Executive Director, Marek Jelinek.

"Although economic growth in key emerging markets such as China or India has moderated, they remain robust as these countries progress with continuing investment in urbanisation, which underpins an improving sentiment towards raw materials for steel production in general," he added.