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2017-11-23

LW Bogdanka after three quarters of 2017 – improved financial results with similar level of mining and sales

In the third quarter of 2017 the Lubelski Węgiel Bogdanka Group generated revenue of PLN 405 million, and net profit of PLN 31.5 million. EBIT in Q3 2017 amounted to PLN 44.4 million, while EBITDA totalled PLN 133.9 million.  

Cumulative after three quarters of 2017, revenue amounted to PLN 1.3 billion (down by 0.6% y/y) and net profit amounted to PLN 143.7 million (up by 19.6% y/y). In the analysed period, EBIT was PLN 191.9 million (up by 24.1% y/y), while EBITDA totalled PLN 452.5 million (up by 4.7% y/y).


The Company believes the achieved financial results are good. The Company continues to distinguish itself in the industry thanks to a permanent cost control and optimisation of capital expenditure.

Bogdanka retains a strong market position. After three quarters of 2017, the Company’s share in the market of thermal coal sales accounted for 17.7%, and its share in the market of thermal coal sales to commercial power plants accounted for 25.5%.

In Q3 2017, commercial coal production was performed as per the plan and reached a level of 2.2 million tonnes. Sales in this period of more than 2 million were also in line with the plan. As a consequence, after the three quarters of 2017, both production and sales of commercial coal amounted to about 6.7 million tonnes (and were comparable to those generated in the same period a year earlier). The length of gallery workings completed in the first nine months of 2017 totalled 22.5 km, which means a 22.3% increase compared to the same period of 2016.

The target value for annual production of approx. 9 million tonnes remains unchanged.

After three quarters 2017, LW Bogdanka retained the high level of output (65.8% compared to 62.2% a year before in the same period) despite a decrease in output in Q3 2017 resulting from difficult mining and geological conditions.

 

The financial results achieved after three quarters of this year are in my opinion good – attention should be paid to the increased profitability with a concurrent similar level of mining and sales and practically flat level of realised prices. Our constant efforts on cost efficiency are clearly visible, and our production target for this year – i.e. 9 million tonnes – remains unchanged, said Krzysztof Szlaga – President of the Management Board of LW Bogdanka S.A.

Highlights of the third quarter include the application for a hard coal mining licence filed by Bogdanka with respect to the Ostrów deposit in the Ludwin mining Area, which was followed by obtaining the same by the Company in November this year. In October 2017 the Company signed an Annex to the Long-Term Agreement for the sale of thermal coal with the Zakłady Azotowe Puławy Group, thus increasing the quantitative volumes of supplies and rising the price. Also in October, the Company signed an agreement with respect to coal allowances paid to retirees and pensioners. As a result of the agreement, the balance of provisions at the Company will change, leading to a one-off positive impact on its operating profit in the fourth quarter of 2017 in the amount of approx. PLN 110 million.
 

In the third quarter, in pursuance of our Strategy, we filed an application for a mining licence for the Ostrów deposit and in November we obtained it. An almost two-fold increase in the resource base means that, as a result of obtaining the licence, we are able to plan in the long term and secure the mine’s development. In October this year we signed an agreement with the trade unions with respect to coal allowances, which means that Bogdanka has resolved the issue of coal allowances for both present and future retirees and pensioners, added Krzysztof Szlaga.