Sadovaya sales fall in June

Sadovaya Group (SGR PW) decreased coal sales 30% mom to 47 kt in June, the company said in a trading update yesterday. It’s the second straight month sales declined after -13% mom in May, coal mining receded 13% mom to 38 kt in June. On a yoy basis, coal sales plunged 36% to 387 kt in 1H12, though mining increased 16% to 228 kt. Sadovaya also updated its schedule for commissioning its waste enrichment complex, now targeting August (vs. June initially and July afterward). The launch of a new longwall at Rassvet-1 Mine, which was initially scheduled for the end of 2Q12, is now shifted to August as well.

Roman Topolyuk: Sadovaya Group continues squeezing its operating performance by cutting low-profitable third-party coal reprocessing (-58% mom to around 11 kt in June we esimate), while monthly mining volumes are more or less stable. Given the 1H12 total sales figure, Sadovaya’s plans to sell 1.18 mmt of coal in 2012 appear unachievable, even though in 2H12 the company will see an increase in its own coal production due to the launch of two new longwalls and the waste beneficiation plant. Postponement of commissioning of the latter facilities is another reason why Sadovaya should downgrade its full-year 2012 plans. All in, the news looks discouraging for Sadovaya.