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Solid Energy, the financially distressed state-owned coal miner, reported a smaller first-half loss is it focuses on containing costs in the face of weak global coal prices, but has yet to draw down on Crown funding put in place to keep the company afloat.
The Christchurch-based SOE made a net loss of $40.9 million in the six months ended Dec 31, down from a loss of $318.2 million when it wore impairment charges of some $222.7 million, it said in a statement. Underlying earnings, a measure that strips out impairments and large one-off items, was a loss of $28.7 million, compared to a profit of $3.5 million, while revenue sank 28 percent to $236.1 million.
"The company's stringent controls on spending and productivity improvements have had a positive impact on the half year result, but weak global coal markets remain challenging," acting chair Pip Dunphy said.
"The company's financial recovery is likely to be prolonged and will depend on a number of factors, including continuing improvement in its business performance and higher prices in international coal markets," she said.
Still, earnings were slightly ahead of expectations, and the company hasn't needed to draw down under two $50 million working capital facilities made available by the government as part of last year's restructuring package to reduce the miner's bank debt.
Earnings before interest, tax, depreciation, amortisation and fair value adjustments fell 17 percent to $15.2 million. The SOE is targeting EBITDAF of $30 million in the 2013/14 financial year, rising to $41 million and $51 million in the following years, according to its Statement of Corporate Intent.
The result comes days after would-be Denniston Plateau coal miner Bathurst Resources said it will lay off 29 staff and clamp down on costs in an attempt to ride out the lowest world prices for coking coal in the past nine years. Solid mines similar coals at its nearby Stockton mine.
The SOE cut costs by $74.2 million to $255.5 million, having slashed its workforce to 867 people as at Dec 31 from 1,658 in July 2012.
Solid Energy lifted export sales of coal 10 percent to 1.1 million tonnes, though New Zealand sales almost halved to 600,000 tonnes due to New Zealand Steel and Genesis Energy changing their supply arrangements.
The weaker domestic sales weighed on Solid Energy's cash flow, with an operational outflow of $1.2 million, compared to an outflow of $55.8 million a year earlier.