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Results for 2018, good prospects for 2019

LW BOGDANKA S.A. has announced financial results for 2018.Bogdanka’s consolidated revenue for that period amounted to PLN 1,756.7 million, EBITDA – PLN 469.2 million, operating profit – PLN 62.0 million, and net profit – PLN 53.8 million.

In 2018, Bogdanka completed over 37 kilometers of roadway excavations compared with 30.7 kilometers in 2017 (a 20% increase y-o-y), which was a record-breaking result in the Company’s history. Intensified preparatory works connected with the plans to increase the production level in the following years, has nevertheless partly burdened current financial results.

In the whole 2018 LW Bogdanka S.A. maintained a high – 24.7% – share in the sales of coal to commercial power plants thus retaining its strong market position. Our share in total power coal sales accounted for 18.7%. Last year, the Company extracted 9 million tonnes of coal and performed the production plan at a level of 8.9 million tonnes.

About 85% of sales generated during the four quarters of 2018 were executed for Enea Wytwarzanie and Enea Połaniec.

The average yield in 2018 was 60.5%, while the figure for 2017 was 64.7%. This was due to the record level of preparatory works, less favourable positioning of mining panels and problems with the quality of the exploited seams in the first and the fourth quarters of 2018.

“As a result of the record-breaking extent of the preparatory works we completed last year, we can now plan this year’s extraction at a level of about 9.4 million tonnes. 2018 saw a continued increase in the prices of coal on both the international and the domestic market, which translated into higher prices in our current-year contracts. Coupled with the planned increase in extraction, this enables us to make a positive assessment of the prospects for 2019,” says Artur Wasil – President of the Management Board of LW Bogdanka S.A.

In 2018, the LW BOGDANKA Group had investment expenditure of PLN 463.1 million. The largest portion of this sum, i.e. PLN 300.2 million, was used for new excavations and modernisation of the existing ones.

Apart from the costs incurred in connection with the preparations for the increased scale of activities, other factors that affected the financial results achieved in 2018 were the increased costs of outsourced services, materials and energy, and labour costs.With a few-percent increase in the average price of coal sold, this exerted pressure on the Company’s margins. Except for the items referred to above, the operating profit and the net profit were also shaped by higher value of depreciation resulting from the reversal of impairment loss of property, plant and equipment disclosed in the financial statements as at 31 December 2017,” says Artur Wasilewski, Vice-President of the Management Board for Economic and Financial Affairs of LW Bogdanka S.A.

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

in PLN million 2017 2017 rok
(net of one - off events)
2018 Change (2018/2017
net of one - off events)
Net revenue 1,780.3 1,780.3 1,756.7 -1.3%
EBITDA 708.9 594.0 469.2 -21.0%
EBIT 847.3 236.4 62.0 -73.8%
Net profit 667.9 173.1 53.8 -68.9%

“Our this year’s priority, in addition to increasing the production up to the level of 9.4 million tonnes, is to: continue to work on costs and CAPEX optimisation, strive to improve yield and prepare ourselves to make available the Ostrów deposit, the exploitation of which is scheduled to commence in the fourth quarter of 2020, to begin with – on the basis of the underground infrastructure,” says Artur Wasil – President of the Management Board of LW Bogdanka S.A.