Gareth Penny, chairman of New World Resources (NWR), warned shareholders that the company had to adapt to a "new reality" if it was to survive. In a statement accompanying an absolutely dismal set of half-year results, Mr Penny further stated he does "not believe there will be a repeat of the boom years of 2008 and 2011 any time soon".
New World's share price has fallen by more than nine-tenths in the past two years as depressed coal prices have dragged the European coal miner well into the red. In the six months to 30 June, New World posted negative cash profits of €40m (£34m) and was forced to book €307m of impairment charges on its coal assets. Coal production fell by a quarter year on year, cash mining unit costs climbed 22 per cent, and average realised prices for both thermal and coking coal fell by a quarter.
The question now is how quickly the company can deliver cost-saving initiatives. A plan is in place to cut staff and wages, sell down inventories, slash capital expenditure, sell or close underperforming mines, and shift production more toward coking coal by the end of 2014. But this may be easier said than done.
Analysts at JPMorgan Cazenove say New World faces a €200m funding gap by the firs quarter of 2014. They forecast an adjusted loss per share of 89¢ in the current year, falling to a loss per share of 68¢ in 2014.
NEW WORLD RESOURCES (NWR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 79p | MARKET VALUE: | £209m | |
| TOUCH: | 79-80p | 12-MONTH HIGH: | 339p | LOW: 52p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 122¢ | NET DEBT: | 203% | |
| Half-year to 30 Jun | Turnover (€m) | Pre-tax profit (€m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2012 | 694 | 48.4 | 12.0 | 6 |
| 2013 | 493 | -477 | -150 | nil |
| % change | -29 | - | - | - |
£1=€1.17 | ||||
