Solid Energy forecasts $200m sales slump, launches review
BUSINESSDESK: Solid Energy, the state-owned coal miner being prepared for partial sale, says revenue will tumble about $200 million this year in the face of "extremely challenging" market conditions, with weaker prices and a strong kiwi dollar.
The Christchurch-based company says the price of high-grade coking coal has tumbled 40% to $US200 a tonne, a multi-year low. The kiwi has gained 3.7% so far this year, recently trading at 81.79 US cents.
“While many in the industry still expect demand, driven by Asia, to pick up again strongly sometime in 2013 Solid Energy needs to plan to withstand these market conditions for at least the next 12 months and possibly for 24 months or longer," chief executive Don Elder says.
“As a consequence, we are reviewing all areas of our business, including current and future operations, all fixed and variable costs, and the values of some of our assets, which will result in us taking significant impairments.
"Our aim is to preserve cash through reduced spending while, as far as possible, maintaining our longer-term value opportunities," he says.
Further details of the structural and operational changed will be provided in the company's outlook later this month when its 2012 financial results are announced.