Kemerovo, RussianFederation
OJSC “KuzbasskayaToplivnayaCompany” (RTS/MICEX: “KBTK”), one of the fastest-growing thermal coal producers in Russia, is pleased to announce its operational results for the third quarter and nine months ended 30 September 2010.
Quarterly Operational Results1
| Q3 2010 | Q2 2010 | change, % | |
| Coalproduction (mln. tonnes) | 1,87 | 1,23 | 52% |
| Sortedcoal (mln. tonnes) | 1,16 | 0,87 | 33% |
| Enriched coal(mln. tonnes) | 0,03 | - | - |
| Salesvolume (mln. tonnes), incl.: | 2,27 | 1,59 | 43% |
| Export sales volume | 1,00 | 0,89 | 12% |
| Domesticsalesvolume | 1,27 | 0,70 | 83% |
In Q3 2010 the volume of coal production increased significantly by 52% quarter-on-quarter to 1.87 mln. tonnes (Q2 2010: 1.23 mln. tonnes). The strong pick up of production volumes was driven primarily by traditional growth of demand for coal among Russian customers before the start of the heating season. During the quarter the Company continued to execute its stated strategy of increasing the share of high added value products in total sales structure and drove coal sorting volumes. The volume of coal sorted by coal-crushing and screening units increased by 33% quarter-on-quarter to 1.16 mln. tonnes (Q2 2010: 0.87 mln. tonnes). During Q3 2010 the monthly average volumes of coal production and sorting were the highest in the Company’s history and amounted to 0.62 and 0.39 mln. tonnes, respectively.
The Company continues to implement its strategy for increasing of production efficiency by reducing coal mining losses. In Q3 2010 the coal enrichment plant “Kaskad”, which was launched on August 24 2010, produced 25 thousand tonnes of coal by processing and enriching high-ash coal and diluted raw coal, which previously were not used in operations. The Management believes that the enrichment plant production will utilize its full capacity in Q4 2010.
The volume of coal sales in Q3 2010 increased by 43% to 2.27 mln. tonnes (Q2 2010: 1.59 mln. tonnes), including 1.78 mln. tonnes of coal produced by the Company and 0.49 mln. tonnes of coal purchased from third-parties.
During the third quarter 2010 the Company increased its domestic as well as export sales. Export volumes increased by 12% and domestic sales gained 83% quarter-on-quarter thanks to Russian customers active replenishment of coal stocks before the heating season start. As for domestic sales structure, there has been a decline of coal resale and increase of own coal sales, which usually bring higher margin to the Company. The share of own coal sales in total domestic sales increased to 61% compared to 53% in the Q2 2010.
In Q3 2010 an averagedomesticcoal pricenetofVATandrailroadtariffsincreased by 3% quarter-on-quarter and reached RUB 956 per tonne (Q2 2010: RUB 930 per tonne). An average export price net of railroad tariffs increased by 13% quarter-on-quarter to RUB 1,079 per tonne (Q2 2010: RUB 957 per tonne). The growth of the Company’s average sale prices on domestic market has been related to seasonal factors, and export prices have been positively influenced by the decrease of 2009 contracts coal shipments and of sales under the contracts, signed in 2010 at higher prices.
Year To Date Operational Results
|
9M 2010 |
9M 2009 | change, % | |
| Coalproduction (mln. tonnes) | 4,49 | 4,38 | 5% |
| Sortedcoal (mln. tonnes) | 2,94 | 2,20 | 34% |
| Enriched coal (mln. tonnes) | 0,03 | - | - |
| Salesvolume (mln. tonnes), incl.: | 5,79 | 5,08 | 14% |
| Export sales volume | 2,64 | 1,88 | 40% |
| вDomesticsalesvolume | 3,15 | 3,20 | -2% |
During the first nine months of 2010 the Company increased coal production volume by 5% to 4.59 mln. tonnes (9M 2009: 4.38 mln. tonnes). Rising demand for the Company’s sorted coal and screenings resulted in growth of volume of coal sorted by coal-crushing and screening units by 34% year-on-year to 2.94 mln. tonnes (9M 2009: 2.20 mln. tonnes).
Coal sales volume increased by 14% compared to the same period last year and reached5.79 mln. tonnes(9M 2009: 5.08 mln. tonnes), because of export growth, which increased by40%year-on-year. Hence, the share of export amounted to 46%(9M 2009: 37%). The Company’s largest export markets in 9M 2010 have been China and South Korea – 46% of Company’s total export sales (9M 2009: 43%), Poland – 42% (9M 2009: 48%), Ukraine – 6% (9M 2009: n/a), Turkey – 3% (9M 2009: n/a), Czech Republic – 3% (9M 2009: n/a), and Spain – 1% (9M 2009: n/a).
During 9M 2010 an averagedomestic coal pricenetofVATandrailroadtariffs has reached RUB 918 per tonne, exceeding the result of 9M 2009by 8%(RUB 847 per tonne). It is noteworthy that average price of coal sold in Russia has been gradually increasing during each of three past quarters of 2010.
The averageexport coal price for 9M 2010 was RUB 982 per tonne, or 6% less compared to the same period last year (9M 2009: RUB 1,043 per tonne). The lower level of average price is related to the base effect as in Q1 2009 the Company sold coal under the contracts signed in 2008 when global coal prices were at their peak, and in Q1 2010 the Company sold coal under the contracts signed in Q4 2009 when the prices were affected by the crisis. Nevertheless, in current year the average export price has been increasing from quarter to quarter affected by recovery of the global coal market and the start of shipments by the contracts signed in 2010.
Management of the Company is satisfied with the Q3 and 9M 2010 operational results.
The Company plans to release its unaudited interim 9M 2010 IFRS Statements on November, 22 2010. A conference-call to discuss the financial results will be held the same day at 5PM Moscow time (2PM London time). Conference call details will be issued separately.
For more information please contact:
Financial Dynamics Moscow
Tatiana Kosheleva
Leonid Solovyev
+7 495 795 06 23
OJSC "Kuzbasskaya Toplivnaya Company" Kemerovo
Elena Sarycheva
Head of public affars department
+7 384 236 47 62
For investor enquiries please contact:
OJSC "Kuzbasskaya Toplivnaya Company" Moscow
Anton Rumyantsev
Investor relatinons manager
+7 495 787 68 05
Company Overview
OJSC Kuzbasskaya Toplivnaya Company (“KTK” or the “Company”), is one of the fastest-growing thermal coal producers in Russia. In terms of the 2009 production volume, it was ranked 7th among the largest thermal coal producers in the country. In the ten years since its establishment in 2000, the Company has commissioned and launched three open-pit mines, achieving annual production volume of 6.15 million tonnes of coal in 2009. The Company expects to continue to grow its production volume, in particular, following the launch of the Cheremshansky mine in 2008 and ongoing investments into its high performance modern mining technology, aimed at achieving the aggregate structural capacity 2 of existing mines of 11 million tonnes of coal per year.
According to IMC, the Company’s JORC coal resources totalled 409.3 million tonnes of ROM coal as of January 1, 2010, of which 191.6 million tonnes were proven and probable reserves, recoverable during the period of 2010-2029. The Company produces exclusively high quality 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 of each other, a number of operations are conducted centrally, thereby minimising overhead costs and expenses.
In 2009, the Company’s total coal sales amounted to 7.4 million tonnes of coal, of which 6.0 million tonnes were extracted by the Company and 1.4 million tonnes were retailed after purchasing from other coal producers. The Company maintains a diversified sales structure balanced between export and domestic sales with approximately 64% of the coal sold to domestic consumers and approximately 36% exported, primarily to Poland, South Korea and China, in 2009.
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 31 December 2009, the Company’s distribution network included 60 owned and operated points of sale and delivered 2.8 million tonnes of coal in 2009, positioning KTK as one of the principal suppliers of coal to retail customers in Western Siberia.
FY 2009 Financial Highlights
For more information please contact:
Financial Dynamics Moscow
Oleg Leonov
Leonid Solovyev
+7 495 795 06 23
1 The Company’s business is affected by seasonality of thermal coal demand in Russia and globally. By 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.
2 The maximum production capacity that the Company believes could be achieved (taking into account projected stoppages for planned repair and maintenance) in an annual period if the Company were able to process all the coal that could be mined using the Company’s existing mine facilities after acquisition of certain mining and transportation equipment in accordance with its current capital expenditure program
3 EBITDA for each period is defined as results from operating activities, adjusted for amortisation 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.
