Coal Energy increases coal production 17% in FY12

Coal Energy (CLE PW) reported coal mining 158 kt in June and coal production from waste of 35 kt last month (both flat mom). In the company’s FY12, which ended June 2012, Coal Energy mined 1.6 mmt of coal and recovered 262 kt of coal from waste, for a total of 1.9 mmt (+17% yoy).

Roman Topolyuk: Despite overall flat mom mining figures, the company shifted toward steam coal extraction: thermal coal underground production grew 1.8% mom to 135 kt, following the announced launch of two longwalls at the end of June, while coking and dual-purpose coal output slid 7.3% mom to 23 kt. We explain the latter by overall weakness in the coking coal market and a greater focus of Ukrainian coke plants on imports – purchases of coking coal abroad grew 26% yoy in 6M12 to 7.7 mmt while coke production remained flat in Ukraine. Going forward, we expect Coal Energy to increase monthly mining figures and load new longwalls. However, margins will experience pressure due to low coal prices (the latest reported EBITDA margin of Coal Energy was for 9MFY12, at 36.5%).