Kemerovo, Russian Federation - OJSC “Kuzbasskaya Toplivnaya Company” (RTS/MICEX: “KBTK”), one of the fastest-growing thermal coal producers in Russia, is pleased to announce its operational results for the second quarter 2012 and six months ended June 30, 2012.
Year To Date Operational Results 1
|
|
6M 2012
|
% of total |
6M 2011
|
Ch.
|
|
Coalproduction,
(mln. tonnes) incl.:
|
4.08
|
|
3.74
|
9%
|
|
Karakansky South
|
1.47
|
36%
|
1.49
|
-1%
|
|
Vinogradovsky
|
0.65
|
16%
|
0.62
|
5%
|
|
Cheremshansky 2
|
1.98
|
48%
|
1.65
|
20%
|
|
|
|
|
|
|
|
Sorted coal
|
3.00
|
74%
|
2.53
|
19%
|
|
Washed coal
|
0.41
|
10%
|
0.35
|
17%
|
|
Sales volume 3
(mln. tonnes), incl.:
|
4.85
|
|
4.51
|
8%
|
|
Export sales volume
|
3.06
|
63%
|
3.07
|
0%
|
|
Domestic sales volume
|
1.79
|
37%
|
1.44
|
24%
|
|
|
|
|
|
|
|
Own coal
|
3.97
|
82%
|
3.65
|
9%
|
|
Coal re-sale
|
0.88
|
18%
|
0.87
|
1%
|
|
Average selling price, RUB/tonne 4
|
1,318
|
|
1,165
|
13%
|
|
Average export price |
1,354
|
|
1,187
|
14%
|
|
Average domestic price |
1,256
|
|
1,117
|
12%
|
During the first 6 months of 2012 the Company increased coal production volume by 9% to 4.08 mln. tonnes (6M 2011: 3.74 mln. tonnes). Rising demand for the Company’s sorted coal products among Russian and foreign customers resulted in a growth of volume of coal sorted by coal-crushing and screening units by 19% year-on-year to 3.00 mln. tonnes (6M 2011: 2.53 mln. tonnes). The volume of high quality coal produced by “Kaskad” washing plant from the mining waste, reached 410 th. tonnes during the first 6 months of 2012, increasing by 17% year-on-year (6M 2011: 350 th. tonnes). Currently 10% of coal produced is provided by washing on the “Kaskad” plant.
6M 2012 coal sales volume increased by 8% year-on-year to 4.85 mln. tonnes (6M 2012: 4.51 mln. tonnes). The volume of export sales for the first 6 months of 2012 remains largely the same as the first 6M 2011, when it 3,06 mln tonnes. At the same time, coal sales on the domestic market increased by 24% during the first 6 months of 2012 to 1,79 mln tonnes (6M 2011: 1,44 mln tonnes). The share of export sales in the total sales volume decreased to 63% compared to 68% in the same period last year.
In the first half of year 2012 the average price of the Company’s coal sales increased by 13% year-on-year to RUB 1,318 per tonne (6M 2011: RUB 1,165 per tonne). The average price domestic coal price net of VAT and railroad tariffs increased by 12% during the first 6 months of 2012 and reached the price of RUB 1,256 per tonne (6M 2011: RUB 1,117). The average export coal price in the first half of 2012 was RUB 1,354 per tonne, which is 14% higher than in the same period last year (RUB 1,187 per tonne).
Quarterly Operational Results 5
|
|
Q2 2012
|
% of total |
Q1 2012
|
Ch.
|
Q2 2011
|
Ch. 6
|
|
Coalproduction,
(mln. tonnes) incl.: |
1.90
|
|
2.18
|
-13%
|
1.91
|
-1%
|
|
Karakansky South
|
0.72
|
37%
|
0.75
|
-4%
|
0.80
|
-10%
|
|
Vinogradovsky
|
0.28
|
15%
|
0.37
|
-24%
|
0.18
|
56%
|
|
Cheremshansky 7
|
0.91
|
48%
|
1.07
|
-15%
|
0.94
|
-3%
|
|
|
|
|
|
|
|
|
|
Sorted coal
|
1.41
|
74%
|
1.59
|
-11%
|
1.36
|
4%
|
|
Washed coal
|
0.21
|
11%
|
0.20
|
5%
|
0.19
|
11%
|
|
Sales volume 8
(mln. tonnes), incl.:
|
2.04
|
|
2.81
|
-27%
|
2.08
|
-2%
|
|
Export sales volume
|
1.45
|
71%
|
1.61
|
-10%
|
1.67
|
-13%
|
|
Domestic sales volume
|
0.59
|
29%
|
1.21
|
-51%
|
0.41
|
44%
|
|
|
|
|
|
|
|
|
|
Own coal
|
1.80
|
88%
|
2.17
|
-17%
|
1.73
|
-2%
|
|
Coal re-sale
|
0.24
|
12%
|
0.64
|
-63%
|
0.36
|
-33%
|
|
Average selling price, RUB/tonne 9
|
1,271
|
|
1,352
|
-6%
|
1,175
|
8%
|
|
Average export price |
1,259
|
|
1,440
|
-13%
|
1,173
|
7%
|
|
Average domestic price |
1,302
|
|
1,233
|
6%
|
1,185
|
10%
|
In light of weakened export market for forward sales for 2013, the management team elected to reduce the 2012 annual production target by 6% from 9.30 mln. tonnes to 8.70 mln. in order to supply only profitable export route and avoid a potential excess supply situation with the need to enter into loss making sales. The 2012 production level is therefore expected to be broadly in line with the 2011 production level. At the same time as reducing the production target, the Company has drawn up and is implementing a program to increase the share of sales in the domestic market, where net back pricing can be higher than in some export markets. The company is also working to reduce costs including by reducing the number of external contractors working on site in line with the new planned production level.
The volume of coal production in Q2 2012 decreased by 13% compared to the first quarter of 2012 to 1.90 mln tonnes (Q1 2012: 2.18 mln. tonnes). The volume of coal sorted by coal-crushing and screening units, which produce screened and sorted coal products with high added value, decreased 11% quarter-on-quarter to 1.41 mln tonnes (Q1 2012: 1.59 mln. tonnes). The volume of washed coal production on “Kaskad” washing plant increased by 5% quarter-on-quarter to 210 th. tonnes (Q1 2012: 200 th. tonnes).
Due to the normal seasonal slow down in coal trading activity after the winter heating season, the Company decreased the volume of coal sales by 27% in Q2 2012 compared to Q1 2012 resulting in sales of 2.04 mln. tonnes (Q1 2012: 2.81 mln. tonnes), including 1.80 mln. tonnes of coal produced by the Company and 0.24 mln tonnes of coal purchased from third parties.
During the quarter, the Company sold 0.59 mln. tonnes of coal on the domestic market, which is 44% higher than the same period last year (Q2 2011: 0.41 mln. tonnes). Compared with the Q1 2012 (1.21 mln. tonnes), the volume of domestic coal sales decreased by 51% due to seasonality of coal consumption on the domestic market. In Q2 the volume of export shipments reduced by 10% compared to Q 2012 and was 1.45 mln. tonnes (Q1 2012: 1.61 mln. tonnes). As a consequence, the share of export sales in the total sales of coal volume increased to 71% in Q2 2012 compared to 57% in Q1 2012.
In Q2 2012 the average price of selling coal decreased by 6% quarter-on-quarter to RUB 1,271 per tonne (Q1 2012: RUB 1,352 per tonne) following the price decrease on the main export markets.
The average domestic coal price net of VAT and railroad tariffs increased by 6% quarter-on-quarter and reached RUB 1,302 per tonne (Q1 2012: RUB 1,233), driven by increase of higher value added sorted coal sales.
The average export price net of railroad tariffs decreased by 13% quarter-on-quarter to RUB 1,259 per tonne (Q1 2012: RUB 1,440 per tonne). Reduction of the average prices on export markets during the quarter are linked with declined demand on the Asian market, which is connected with slowdown of growth in China and in the Eurozone countries.
The average export price in Asia-Pacific region was RUB 1,400 per tonne, which represents a decrease of 5% compared to Q1 2012 (RUB 1,472 per tonne), however on a year-on-year basis slaes prices in 2012 are significantly higher than in 2011 with Q2-2012 prices being 43% higher than they were in Q2 2011 (RUB 978 per tonne). The average selling price in Q2 2012 on European market decreased by 22% compared to Q1 2012 (RUB 1,421 per tonne) and amounted RUB 1,115 per tonne.
The Company plans to release its unaudited interim 6M 2012 IFRS Statements on August 24, 2012. A conference-call to discuss the financial results will be held the same day at 5 PM Moscow time (2 PM London time, 9 AM New York time). Conference call details will be issued separately.
Contacts for analysts and investors:
OJSC "Kuzbasskaya Toplivnaya Company" (Moscow)
Vasily Rumyantsev
Investor Relations Manager
Tel.: +7 (495) 787-68-05
E-mail: vkr@oaoktk.ru
Contacts for press:
OJSC "Kuzbasskaya Toplivnaya Company" (Kemerovo)
Elena Sarycheva
Head of public affairs department
Tel.: +7 (3842) 36-47-62
E-mail: es@oaoktk.ru
Notes to editors:
Additional information about the Company and investor calendar: www.oaoktk.ru/en/investors
Company Overview
OJSC “Kuzbasskaya Toplivnaya Company” (“KTK” or the “Company”) is one of the fastest-growing thermal coal producers in Russia. In terms of 2011 production volume 10 , it was ranked 7th among the largest thermal coal producers in the country. In the twelve years since its establishment, the Company has commissioned and launched three open-pit mines and a washing plant, achieving annual production volume of 8.74 mln. tonnes of coal in 2011.
The Company’s JORC coal resources totaled 402 mln. tonnes of ROM coal as of January 1, 2011 and proven and probable reserves amounted to 185 mln. tonnes of ROM coal, recoverable during the period of 2011-2030. In December 2011 the Company won an auction for the right to use subsurface of “Bryansky” coal deposit with reserves of 250 mln. tonnes of coal in the C2 category. The surface mine is located in close proximity to existing infrastructure and production assets.
The Company produces exclusively thermal coal, classified as grade “D” under the Russian classification system, with a naturally low sulphur and phosphorus content, as well as a relatively high calorific value.
The Company conducts mining operations at three open-pit mines, located in the Kuzbass area, Russia’s largest coal producing region. The Company’s mining operations are supported by an extensive production and logistics infrastructure, including its own railway network and facilities, which enable the Company to transport 100% of produced coal from the open-pit mines to the main railway hub at the long-distance railway network, operated by the Russian Railways. Furthermore, as the Company’s mines are compactly located within 5 km from each other, a number of operations are conducted centrally, thereby minimizing overhead costs and expenses.
In 2011, the Company’s total coal sales amounted to 10.66 mln. tonnes of coal, of which 8.58 mln. tonnes were produced by the Company and 2.08 mln. tonnes were retailed after purchasing from other coal producers. The Company maintains a diversified sales structure balanced between export and domestic sales: in 2011 about 39% of total sales were sold to domestic consumers and approximately 61% exported, primarily to Eastern Europe and the Asia-Pacific region.
The Company’s strong regional presence is supported by an extensive retail distribution network, located throughout the Kemerovo, Novosibirsk, Omsk and Altay regions of Western Siberia. As of 01 January 2012, the Company’s distribution network included 67 owned and operated points of sale and delivered 3.18 mln. tonnes of coal in 2011, positioning KTK as one of the principal suppliers of coal to retail customers in Western Siberia.
FY 2011 Financial Highlights
1 The Company’s business is affected by seasonality of thermal coal demand in Russia and globally. This means its quarterly operational results can be subject to significant fluctuations. Historically, the Сompany has been producing more coal in Q3 and Q4 than in Q1 and Q2 of each year. However, the Company does not guarantee that this trend will continue in the future.
2Including “Kaskad” washing plant
3 Sales of the group of companies, subject to the resale of coal purchased from third parties
4 Excluding railway tariffs and VAT
5 The Company’s business is affected by seasonality of thermal coal demand in Russia and globally. This means its quarterly operational results can be subject to significant fluctuations. Historically, the Сompany has been producing more coal in Q3 and Q4 than in Q1 and Q2 of each year. However, the Company does not guarantee that this trend will continue in the future.
6 Percentage change, Q2 2012 compared with Q2 2011
7 Including “Kaskad” washing plant
8 Sales of the group of companies, subject to the resale of coal purchased from third parties
9 Excluding railway tariffs and VAT
10 Metal Expert, January 2012
11 EBITDA for each period is defined as results from operating activities, adjusted for amortization and depreciation, impairment loss and loss on disposal of property, plant and equipment. EBITDA is not a measurement of the Company’s operating performance under IFRS and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with IFRS or as an alternative to cash flow from operating activities or as a measure of the Company’s liquidity.
