Sadovaya raises coal mining 71% yoy in 2011

Sadovaya Group (SGR PW) increased coal production 71% yoy to 475,247 t in 2011, the company reported today. Coal trading volumes increased 15% yoy to 1.26 mmt, beating its 2008 record of 1.19 mmt. In December 2011 alone the company mined 57,010 t of coal (up 2.3x yoy, up 19% mom), and sold 123,198 t of coal (down 3% yoy, 6% mom).

Sadovaya Group coal statistics for 2011

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                                          ths t   yoy  vs.plan
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Coal sales                        1,264.5   15%       4%
Coal mining                       475.2   71%      -5%
Coal recovery from waste     56.0  315%     -60%
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Source: Company data

Alexander Paraschiy: The company expectedly beat its 2011 trading outlook (by 4%), but underperformed in its mining segment (by 5%), mainly on delays in new mine commissioning. The weak December sales volumes were related mainly to extremely warm weather, in our view. We stick to our view that the company would have beaten its 2011 revenue target by about 10% given both better output and pricing, but fell short of its profitability forecast on a higher than expected share in less profitable trading operations. In 2012, we expect the company to increase coal mining 75% yoy to 830,000 t and coal trading 58% yoy to 2.0 mmt.