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2017-03-31

LWBogdanka after 2016 - good operating and financial results despite the continuing difficult market situation

In 2016 the Lubelski Węgiel Bogdanka Group generated revenue of PLN 1.8 billion, and net profit of PLN 182 million. In the period in question, EBIT amounted to over PLN 237 million, while EBITDA totalled PLN 606.5 million. Coal prices, which still remained low on a year-on-year basis despite the relative stabilisation in Q4 2016, had a significant influence on the financial results.


The Company believes that these are good results which stand out against a backdrop of the Polish mining industry. Continuous cost control and optimisation of capital expenditure made it possible to maintain high profitability ratios despite the fact that the sale price of coal went down by more than 10% year on year. As a result, EBITDA in 2016 remained at an above-average level of 34% in relation to other operators in the world’s mining industry.

In 2016 commercial coal production reached over 9 million tonnes. Sales in this period remained at a similar level of 9.1 million tonnes. The length of gallery workings completed in the last year totalled 23.8 km, which shows an increase of 19% compared to 2015.

The Company retains a strong market position. After 2016, the Company’s share in the market of thermal coal sales accounted for 15.9%, and its share in the market of thermal coal sales to commercial power plants accounted for 25.4%. That means that the Company has come back to levels similar to those achieved in 2014, in the aftermath of the turbulence on the Polish coal market in 2015.

In connection with the development strategy of LW Bogdanka S.A. - Mining Area of the Enea Group until 2025, under the 2030 framework, which was published this year in February, and the flexible development scenario contained in that strategy, the production plans for 2017-2025 provide for an average annual coal production of about 9.2 million tonnes.

 

“The level of extraction and sales achieved in 2016 translated into robust financial results. Our performance makes us all the more proud as we managed to achieve it in a continuing difficult market environment – the last year for our industry was a year characterised by oversupply of coal and declines in coal prices on the Polish market. The coal prices increased significantly on global markets during the year, but that soar did not affect the situation in Poland in 2016. Nevertheless, it was a positive signal for our industry,” said Krzysztof Szlaga, President of the Management Board of Lubelski Węgiel Bogdanka S.A.

“2016 was the first full year in which we operated as a member of the Enea Group. During that period we developed a number of synergies. This has allowed us to further improve our cost efficiency, which has for many years now remained the highest in the industry. The integration with the Group and the resulting benefits related to operations and costs make it possible for us to achieve the good and planned operational and financial indicators. Yet another important achievement of the last year is a significant improvement in the long-term safety of extraction in Bogdanka. We made it possible by signing important annexes to agreements with our key customers in the second half of the year – the Enea Group and Połaniec Power Plant, as well as the Azoty Group and ENERGA Elektrownie Ostrołęka. This has given us solid foundations for the upcoming years to make long-term plans regarding our production, employment and preparatory works. This, in turn, will make it easier for us to control the costs, which has always been a matter of particular importance for our Company,” said Krzysztof Szlaga.