Polish coalminer Bogdanka drops forecasts on state rescue plan

By bne IntelliNews March 12, 2015

Polish coalminer Bogdanka on March 12 lowered its production and spending forecasts for 2015, citing market uncertainty on the back of the state's rescue plan for rival Kompania Weglowa (KW).

Bogdanka said it expects sales and spending to fall in 2015 as it adapts to what it called "new conditions". It referred to the state bail-out of KW and lower market prices. The company gave no concrete indication if it expected revenue or profit for the year to be affected.

The KW rescue is expected to drop already low coal prices. The government intervention, which will keep KW's 14 coal mines functioning, "undermines the assumptions of Bogdanka's strategy," the company said in a statement. It said it plans to review its strategy for 2013-2020.

That release accompanied 2014 results, which saw revenues up "despite tough market conditions". Revenues from sales were over PLN2bn (€484mn), that is 6% up year on year. EBITDA was almost PLN750mn, with net profit PLN272mn.

In the fourth quarter, coal production totalled 2.6mn tonnes, a company record signifying growth of 21.5%. Coal production in 2014 was 9.2mn tonnes, up 10.1% year on year.

Output in 2015 is expected around the same level the company said. At the same time, Bogdanka forecasts spending will fall to around PLN581mn from PLN803mn in 2014.

BZWBK's Pawel Puchalski told PAP that there are two main negative factors at work. "The first is guidance for coal output in 2015 below 10mn tonnes, and the second is that every contract for coal supplies may be terminated," the analyst said.

Bogdanka will build a "safe" 2014 dividend proposal with an eye on the weakening market, CEO Zbigniew Stopa told the newswire. "The dividend isn't determined by the past, but the future and how the firm will function in 2015," he said. "We also look to 2016 with concern for what will happen on the market. We have lower volumes than we had assumed."

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