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Q3 2018 LW Bogdanka increases sales

In this period, the consolidated revenue of Bogdanka increased by 18.4% up to PLN 479.7 million, and EBITDA dropped by 9.8% down to PLN 120.8 million. The operating profit amounted to PLN 14.6 million and the net profit reached PLN 9.7 million. After three quarters of 2018, revenue of the LW Bogdanka Group increased by 2.2% up to PLN 1.34 billion, while EBITDA dropped by 11.7% down to PLN 399.4 million.The operating profit amounted to PLN 92.6 million and the net profit was PLN 76 million.

During three quarters of 2018, Bogdanka completed 28.6 kilometres of galleries compared to 30.7 kilometres in the entire 2017, which translates into a year-to-year increase by 27%. This means that the record-breaking length of galleries will have been reached this year, which partially charges the financial results now, but is an investment in the future growth in extraction. If this factor is excluded from the financial results for the third quarter and for nine months of the year, they would stand at a level close to that recorded for the previous year.

Except for the items referred to above, the operating profit and net profit were shaped also by higher value of depreciation resulting from the reversal of impairment loss of property, plant and equipment of 2015.

In the third quarter of 2018 the production of commercial coal in Bogdanka amounted to 2.3 million tonnes, which translates into a year-to-year increase by 6.9%. Further, during nine months the production of commercial coal in Bogdanka increased by 1.6% up to 6.8 million tonnes.

The sales of commercial coal in LW Bogdanka S.A. grew in the last quarter by 20.2%, to 2.4 million tonnes, and after three quarters it increased by 1.3%, reaching 6.8 million tonnes.

Among positive factors of the third quarter it is worth mentioning that levels of production and sales of coal were higher year to year, and that sales were performed at higher prices.At the same time a growth in costs was recorded, which was related to the general situation in Poland; this item mainly refers to the costs of outsourced services, materials and labour costs. It must be stressed that – if we eliminate from the operating activities the costs related to less advantageous geological conditions and extremely broad gallery-related works – the EBITDA results are close to those recorded last year. We sustain the declared production plan for the whole year at a level not lower than 9 million tonnes”. - said Mr Artur Wasil, President of the Management Board LW Bogdanka S.A 

Costs by type of LW Bogdanka S.A. increased during nine months of 2018 by more than 16%, up to PLN 1.51 billion with a concurrent dynamic growth of preparatory works - in this period the Company completed 28.6 kilometres of galleries compared to 22.5 kilometres a year before, which means an increase by 27.1%. Higher costs of materials and energy consumption as well as outsourced services are primarily due to these preparatory works.

In the period January-September 2018, the Group incurred investment expenses at a level of PLN 296.1 million, which represents 60% of the annual plan (PLN 496 million). The largest portion of this sum, i.e. PLN 231.2 million, was used for new excavations and modernisation of the existing ones. The next item in line that required the most expenditure was the maintenance of the machinery park. The Group spent for this purpose PLN 38.1 million.

After three quarters of 2018 the share of Bogdanka in the market of thermal coal was 19% and of supplies of coal to the commercial power sector in Poland – 25.4%

Over 81% of sales generated in the three quarters were executed for Enea Wytwarzanie and Enea Połaniec.

The consolidated financial highlights of the LW Bogdanka Group for Q3 and three quarters of 2018 are presented in the table below:

[in PLN million] 3Q 2017 3Q 2018 Change 1-3Q 2017 1-3Q 2018 Change
Net revenue 405.0 479.7 18.4% 1307.1 1335.6 2.2%
EBITDA 133.9 120.8 - 9.8% 452.5 399.4 - 11.7%
EBIT 44.4 14.6 - 67.1% 191.9 92.6 - 51.7%
Net profit 31.5 9.7 - 69.2% 143.7 76.0 - 47.1%