Coal Energy reports a USD 6.7 mln net loss in 3QFY13

Coal Energy (CLE PW) reported on May 24 a 11% yoy drop in revenue to USD 104.1 mln in 9MFY13, a 59% yoy slide in EBIT to USD 14.8 mln and a 79% yoy plunge in net income to USD 5.2 mln. The company generated USD 17.4 mln in revenue in 3QFY13 (-63% qoq), suffered a USD 3.8 mln operating loss compared to a USD 7.6 mln operating profit in the prior quarter, and endured a USD 6.7 mln net loss versus a USD 4.4 mln net profit in 2QFY13. Finished goods on books grew 90% qoq to the equivalent of USD 16 mln. The company’s 3QFY13 CapEx slowed to USD 13.7 mln, compared to the two previous quarters’ average of USD 18 mln. Coal Energy also disclosed that a total consideration of USD 2.3 mln was written down from its subsidiaries’ accounts in Cyprian Laiki Bank on May 18 as part of the country’s restructuring of its financial sector.

Roman Topolyuk: Coal Energy’s 3QFY13 losses weren’t only the result of a decline in sales and selling prices, but also an increase in operating costs since the company didn’t break even, even at the level of gross profit (it had a gross loss of USD 0.1 mln). With a stable cash cost of mining (USD 49/ton), an alarming surge in trading activity seems to be one of the reasons for the operating costs increase – trading activity (third-party coal sales) in 3QFY13 represented 18% of revenue versus 5% a year before. Yet we don’t see plausible reasons for the increase in coal trading against the background of the currently weak coal market. The mentioned USD 2.3 mln write-off from a Cyprus bank will be reflected in the financial statements for 4QFY13, which will affect negatively Coal Energy’s full-year financials.