Author. JSW / Press materials
The capital group of Jastrzębska Spółka Węglowa (JSW) recorded a net loss of PLN 6.062 billion in the first half of 2024, according to the JSW group report published on Friday. A year earlier, the group closed the half-year with a profit of PLN 2.054 billion.
According to the JSW report, the operating loss for the first half of 2024 amounted to PLN 6.835 billion, while the year before the operating profit amounted to PLN 2.536 billion. Sales revenues reached PLN 6.176 billion, compared to PLN 8.598 billion in the first half of 2023.
The coal segment generated an operating loss of PLN 5.362 billion, and the coke segment generated an operating loss of PLN 2.841 billion (a year earlier, the coal segment had an operating loss of PLN 2.555 billion and the coke segment had an operating loss of PLN 275 million). Revenues from the sale of coal amounted to PLN 3.176 billion (PLN 4.949 billion a year earlier), and coke – PLN 2.4 billion (PLN 2.838 billion a year earlier).
The JSW group closed last year with a net profit of PLN 997.1 million, and in the first quarter of this year net loss of PLN 9.7 million. This means that almost the entire net loss for the first half of this year. was established in the second quarter of this year.
As JSW spokesman Tomasz Siemieniec emphasized in a commentary on the results sent on Friday, a net loss of this size in the second quarter of this year. is the result of recognizing an impairment loss on the value of non-financial fixed assets of JSW and JSW Koks in this period in the total amount of PLN 6.3 billion.
The result was also influenced by lower mining and, as a result, lower sales revenues, additionally caused by low prices of the raw material – noted Siemieniec, stipulating that the value of the EBITDA indicator for the second quarter of this year (operating profit plus depreciation and write-offs for non-financial assets) excluding one-off events amounted to PLN 257.5 million.
According to the management board’s report on activities for the first half of this year. JSW’s four hard coal mines produced 6 million tons of coal and sold 5.7 million tons, providing sales revenues from external customers: PLN 3.176 billion, which translated into a negative EBITDA result (operating result plus depreciation and write-offs for non-financial assets) in amounting to PLN 4.444 billion.
In the second quarter of this year alone. mines produced almost 2.9 million tons of coal, i.e. 8.5% less. compared to the previous quarter, and coal sales to external customers amounted to over 1.6 million tons
In turn, three JSW coking plants produced 1.6 million tons of coke and sold 1.7 million tons, which generated revenues from external customers of PLN 2.641 billion and translated into a negative EBITDA result of PLN 2.791 billion. Coke production in the second quarter of this year alone. was lower by 12.3%. than in the first quarter of 2024 and amounted to 0.7 million tons. Coke sales in the second quarter of this year also reached the level of over 0.7 million tons.
Average price of coking coal in the second quarter of this year. was at the level of PLN 945.26, i.e. lower by 10.7%. compared to the first quarter. However, the price of coke was slightly higher, by 0.4%: PLN 1,376.57. Sales revenues were 19.1% lower than in the first quarter of this year. reaching PLN 2.7 billion.
Investments in the coal segment amounted to PLN 2.119 billion in the entire first half of the year, and in the coking segment to PLN 287 million.
In other activities of JSW group entities, including: in the areas of: specialized mining services, IT support, research, development, renovation and maintenance services, logistics, security, insurance, training and laboratory services, sales revenues from external customers amounted to PLN 352.2 million, and the segment’s EBITDA reached PLN 222.7 million zloty. In this part of the group’s activities, PLN 42.7 million was spent on investments.
“The situation in which the JSW group finds itself is far from ideal,” commented Ryszard Janta, president of JSW, quoted by Siemieniec. He assessed that the level of coal extraction has not been satisfactory for many months. “The market environment is also not favorable to us, coal prices on world markets are falling,” the president noted.
“The rising level of costs in recent years means that we are in a difficult financial situation. The Management Board of JSW decided to reach for PLN 2 billion this year from the funds accumulated in the Closed-End Investment Fund. As the management board, we are aware of all the threats, and we have strategic decisions ahead of us that will stabilize the company’s financial situation and guarantee safe jobs in a stably developing company,” Janta declared.
In the consolidated financial statements, the management board of JSW noted that due to the strong dependence of cash flows and the level of cash generated on the sales prices of coal and coke, as well as the constantly high level of investment expenses, in the event of a significant deterioration of the market situation, the group is exposed to the risk of loss of liquidity .
It was reported that during the six months of this year the JSW group generated positive net cash flows from operating activities, despite the loss before tax. The group also achieved positive net cash flows from financing activities, which resulted mainly from loans and credits received.
However, positive net cash flows from operating and financing activities did not cover negative net cash flows from investing activities, which resulted in a significant decrease in the balance of available cash.
JSW’s authorities assured that they are taking a number of strategic and operational actions to minimize the risk of loss of liquidity. It is used, among others, Stabilization Fund, the value of which at the end of June this year amounted to PLN 5.793 billion (with payments so far this year of PLN 1.8 billion and the payment limit recently set at PLN 2 billion). Currently, JSW assesses the level of liquidity risk as “acceptable”.
“As at the date of preparation of these interim condensed consolidated financial statements, the Group estimates that it has sufficient sources of financing to meet its current liabilities, payments related to the settlement of liabilities arising from financing agreements in accordance with the schedule, as well as previously planned strategic projects,” it was written in the consolidated report for half-year.
At the same time, in the assessment of the risks of the JSW group’s operations, the vast majority of risks were identified as medium or high.
The report published on Friday noted, among other things, that the JSW management board on September 26 this year year received information that the management board of the subsidiary JSW Koks had adopted a resolution regarding the Extraordinary General Meeting of JSW Koks with the agenda including the adoption of a resolution regarding the continued existence of JSW Koks.
This results from Art. 397 of the Commercial Companies Code, which states that if the balance sheet prepared by the management board shows a loss exceeding the sum of the supplementary and reserve capitals and one third of the share capital, the management board is obliged to immediately convene a general meeting to adopt a resolution regarding the further existence of the company.
On September 19, JSW announced the completion of impairment tests for fixed assets. The test results indicated an impairment of these assets: in the coal segment, i.e. assets of the Budryk, Knurów-Szczygłowice, Borynia-Zofiówka-Bzie Ruch Bzie and Pniówek mines – in the total amount of PLN 5.4 billion, and in the coke segment, i.e. assets of Koksownia Radlin, Przyjaźń, Jadwiga and the Radlin Heat and Power Plant – in the total amount of PLN 1.4 billion.
At the same time, the company announced the termination of the write-off created in previous years in the coal segment in the amount of PLN 509.5 million.
JSW also announced on September 19 this year. on the conducted test for the impairment of the carrying value of financial assets, i.e. shares of JSW Koks: the results of these tests indicated an impairment of the shares of JSW Koks in the amount of PLN 1.2 billion.
June 21 this year the JSW management board reached an agreement with the social side regarding the increase in the wage bill this year – it will amount to PLN 4.38 billion, PLN 93 million less than last year’s figure.
Jastrzębska Spółka Węglowa is the largest European producer of coking coal used to produce steel.
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