Sadovaya coal mining flat, sales at 2-year low in July

Sadovaya Group (SGR PW) reported a 1% mom increase in coal mining to 38.6 kt and a 29% mom decline in coal sales to 33.9 kt on Friday. In 7M11, mining increased 11% yoy to 266 kt, while coal sales dropped 37% yoy to 421 kt. The company announced it commissioned a new longwall at Rassvet-1 Mine on August 15, with planned monthly output of 14 kt (35% of Sadovaya’s total) to be reached in November. In addition, Sadovaya reiterated its plan to commission a waste processing facility in late August.

Alexander Paraschiy: July was the first month in the company’s public history when coal sales were below mining volumes, and it was the record worst month in terms of coal sales. The company noted in its trading update that coal demand is recovering in August, which is supported by our view of a seasonal increase due to the building up of Ukrainian electricity generation companies’ stockpiles, so we expect this month will be much stronger in terms of sales. Nevertheless, July’s weak trading results look rather discouraging, especially on the back of the recovery in sales highlighted earlier by its peer Coal Energy (CLE PW).