Lump of coal

WSE-listed coal mining group New World Resources (NWR) reported a five-fold jump in Q2 profits thanks to high coal prices, but the figures were well below forecast. Its shares fell on the news.

The firm posted a net profit of €69.7 (zł.233.4) million, but analysts polled by Reuters had expected nearly double that amount. Revenues rose to €507.7 (zł.1,700) million from €323.6 (zł.1,082) million in the same period a year ago. EBIT (operating profit) grew to €101.8 (zł.340.5) million against a forecast €166.6 (zł.554) million.

"Overall costs were high due to one-off personnel costs linked with the company's IPO, plus the fast-appreciating [Czech] crown also hit the operating level," Jan Tomanik, an analyst at Wood&Co. brokerage told Reuters.

NWR is registered in the Netherlands and operates the Czech Republic's largest mines. Last year it signed a deal with state-owned Polish firm Jastrzębska Spółka Węglowa to develop mines in southern Poland. The company is also said to be interested in cross-border coal exploration after a deal allowing such activities was reached last month between Poland and the Czech Republic.

Prices of coking coal - which accounts for around two-thirds of NWR's business - rose by about 50 percent in Q2, according to analysts.

"Prices were pretty much along the lines that we anticipated, and our expectation is that we'll continue to see a very significant growth there, so I would say that the results were reasonable," NWR executive chairman Mike Salamon told Reuters in a phone interview.

"We expect market conditions in the second half of 2008 to continue to be favorable and believe we are well-placed to build on our first-half performance," Salamon added.

NWR is the owner of OKD, the CzechRepublic's largest hard-coal miner. It is investing R600-800 (zł.2,007-2,676) million to reopen the Dębieńsko mine in southern Poland, which has estimated reserves of 190 million tonnes.