Coal Energy EBITDA plunges 66% in FY2013

Coal Energy (CLE PW) reported a 24% decrease in revenue to USD 126 mln in FY2013 (ended June) on a 18% yoy and 14% yoy decline in thermal and coking coal sales to 1.2 mmt and 224 kt, respectively. EBITDA plunged 66% yoy to USD 21 mln, while its FY2013 bottom line turned to a net loss of USD 16 mln vs. a net profit of USD 38 mln a year before. EBITDA coverage in FY2013 came in at 1.1x compared to 6.7x a year before, while net debt to EBITDA worsened to 3.5x from 0.1x in FY2012.

In 4Q of FY2013, the company’s revenue grew 26% qoq to USD 22 mln following a 62% qoq increase in coal sales to 300 kt, but negative EBITDA deepened to USD 2 mln compared to USD -0.9 mln a quarter before. Net quarterly loss increased to USD 10 mln from USD 6.7 mln in 3Q. Coal Energy experienced a leap in 4QFY13 mining costs, boosting the FY2013 figure to USD 54.4 /t after USD 49.0 /t in 9M of FY2013.

Roman Topolyuk: While we expected weak annual results owing to lower yoy sales volume and falling selling prices, a significant increase in mining costs in 4QFY13 was a disappointing surprise. If not caused by one-off events, they can weaken the company’s resilience to operate in adverse market conditions. On FY2013 financials, CLE PW trades at a lucrative EV/EBITDA trailing multiple of 3.5x compared to the 4.6x average for its central European peers. However, we see that a lack of positive drivers in coming quarters will prevent liquidating the discount.