Kuzbass Fuel Co earnings down 28%, output up 5% in 9M
MOSCOW. Nov 22 (Interfax) - Kuzbass Fuel Company (Kuzbasskaya Toplivnaya Company, KTK) saw its net profit to International Financial Reporting Standards (IFRS) plummet 28% year-on-year in January-September to 353 million rubles, the coal producer said in a statement.
Sales revenue grew 29% year-on-year in the 9M but earnings before taxes, depreciation and amortization (EBITDA) fell 1% to 1.2 billion rubles.
The company swung to net profit of 349 million rubles in Q3 2010, compared with losses the previous quarter. Revenue jumped 44% q-on-q in Q3 2010.
KTK financial highlights, mln rubles:
| Q3 2010 | Q2 2010 | 9M 2010 | 9M 2009 | |
| Sales revenue | 3 925 | 2 733 | 9 576 | 7 450 |
| EBITDA | 683 | 12 | 1 224 | 1 543 |
| EBITDA margin, % | 29 | 1 | 21 | 31 |
| Net profit (loss) | 349 | (275) | 353 | 490 |
| Net profit margin, % | 15 | -17 | 6 | 10 |
| Net debt | 2 311 | 2 613 | 2 311 | 3 886 |
| Net debt /EBITDA | 1,2 | 1,5 | 1,2 | - |
KTK said Q3 revenue grew largely on the back of a 43% increase in sales volumes and 7% increase in the average realized sale price of coal. Revenue would have grown 48% minus the transport costs built into the price of coal.
Export revenue grew 24% q-on-q in Q3 to 2.3 billion rubles thanks to a 12% increase in coal supplies and 13% increase in the sale price of the coal. The sale price rose because the structure of sales shifted in favor of contracts for H1 2010 signed at higher prices. Q3 export revenue less transport costs rose 26%.
Revenue from the sale in Russia of coal mined by KTK itself rose 2.3-fold q-on-q to 919 million rubles, and revenue from the sale in Russia of purchased coal soared 70% to 605 million rubles. Overall revenue from coal sales in Russia doubled q-on-q in Q3 2010 to 1.525 billion rubles. This revenue adjusted for transport costs grew 88%.
EBITDA soared almost 57-fold in the quarter due to higher coal production volumes and average realized sale prices, and reduced cash costs per tonne of coal. But EBITDA fell in the 9M due to a drop in the average export price and higher cash costs per tonne in H1 2010 compared with H1 2009.
KTK said it raised coal production 5% year-on-year in January-September to 4.6 million tonnes and sales 14% to 5.8 million tonnes.
Coal extraction was up 52% at 1.87 million tonnes and sales 43% at 2.27 million tonnes in the third quarter compared with Q2 2010.
KTK operating highlights (mln tonnes):
| Q3 2010 | Q2 2010 | 9M 2010 | 9M 2009 | |
| Production | 1,87 | 1,23 | 4,59 | 4,38 |
| Sorting | 1,16 | 0,87 | 2,94 | 2,2 |
| Enrichment | 0,03 | - | 0,03 | - |
| Sale | 2,27 | 1,59 | 5,79 | 5,08 |
| Average price, rubles/tonne | 1010 | 946 | 947 | 920 |
Cash costs fell 37% in Q3 due to a lower stripping ratio and blasting costs.
KTK's first deputy CEO, Eduard Alekseyenko, told Interfax that the company aimed to raise production 10.6% this year as a whole to 6.8 million tonnes, from 6.15 million tonnes in 2009; and to 7.5 million tonnes in 2011.
The company will sell an additional 1.3 million tonnes of purchased coal this year, he said.
KTK sells half of its coal in Russia, mostly in West Siberia, where it is located. Alekseyenko said it exported the rest to Southeast Europe, South Korea and China.
The cost of coal sold domestically and abroad is expected to rise in Q4. "Domestic prices should be 5%-7% higher [than in Q3] and export prices 10%-15% higher," Alekseyenko said.
Kuzbass Fuel Company raised $163 million with an IPO in Russia in May this year. Following the IPO, Mizar Management owned 48.4% of the company on behalf of its general director, Igor Prokudin (56.94% pre-IPO), Laycraft holding owned 16.27% on behalf of the board chairman, Vadim Danilov (28%), and the free float increased to 35.2% from 11%. Igor Prokudin owned an overall 60.9% stake in Kuzbass Fuel Company before the IPO.