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2017-05-25

LW Bogdanka after the first quarter of 2017 – good financial and operating results despite prevailing low prices of coal

In Q1 2017 the Lubelski Węgiel Bogdanka Group generated revenue in the amount of PLN 465.2 million (growth by 10.6% y/y) and net profit of PLN 68.2 million (growth by 25.2% y/y). In the period in question, EBIT amounted to PLN 89.7 million (up by 13.8% y/y), while EBITDA totalled PLN 179.8 million (up by 3.7% y/y).

LW Bogdanka believes the achieved financial results are good. Increase in sales combined with a simultaneous consistent cost control and optimisation of capital expenditure made it possible to maintain high profitability ratios despite low prices of coal. The Company’s EBITDA in Q1 2017 reached 38.7%, and continues to be one of the highest in the coal sector. 

Commercial coal production in Q1 2017 amounted to over 2.4 million tonnes. Sales in the period remained on the similar level, which means that it increased by 9.4% y/y.  The length of gallery workings completed in the first three months of 2017 totalled more than 7.9 km, which represents a growth by 23.4% compared to the same period of 2016.

Bogdanka retains a strong market position. After Q1 2017, the Company’s share in the market of thermal coal sales accounted for 17.8%, and its share in the market of thermal coal sales to commercial power plants accounted for 25.7%.

“Given the prevailing low prices of coal, I think that LW Bogdanka’s financial results after the first quarter of 2017 are favourable.  The implementation of production and sales plans, including coal sales higher by 9.4%, as well as consistent cost control and optimisation of capital expenditure made it possible to obtain such results. We maintain our strong position and a high market share, and remain the most effective and the most modern hard coal mine in Poland,” said Krzysztof Szlaga, President of the Management Board of Lubelski Węgiel Bogdanka.

“One of the most important moments of the last quarter was when Bogdanka announced a development strategy for the Mining Area of the Enea Group until 2025, within the 2030 framework. The strategy provides for two development scenarios: baseline scenario and flexible development scenario which assumes average annual production of coal at a level of approx. 9.2 million tonnes.

Taking into account the current and expected market situation, we are implementing the flexible development scenario. This year our plan is to achieve production at a level of about 9 million tonnes. The presented strategy contains such key initiatives as ensuring close cooperation and synergies in the Kozienice-Bogdanka-Połaniec mining and power generation area, to double its exploitable resources and to implement various innovative strategic projects. In accordance with the dividend policy presented in the Strategy, at the end of April, the Bogdanka’s Management Board recommended that a dividend from 2016 profit should be paid in the amount of PLN 1 per share,”said Krzysztof Szlaga.