New World returns to positive operating cash flow

Finance

New World Resources NV, the Czech coal miner, has attributed improved sales, especially in coking coal as the reason for a return to positive operating cash flows following two negative quarters.

The positive signs have also allowed the company to up its production target for the full year to end-December.

The company generated €46 million (US$31 million) in operating cash flow, during the third quarter to end-September, compared with negative cash flow of €27 million in the first six months of the year. The number is lower, however, than the €119 million earned in the comparable three-month period a year earlier.

“General market conditions began to show signs of improvement during the third quarter of 2009, after a difficult first half of the year,” said the company’s executive chairman, Mike Salamon.

The company says steel production in its customer markets rose by 59% between April and September, but that steel production in its sales region remains 36% below 2008 levels.

Quarter-on-quarter revenues were up 19% to €291 million as coking coal and coke sales volumes were up 27% and 6%, respectively. Mr Salamon says that thanks to the encouraging quarterly performance, production targets have been increased to 11Mt of coal and 840,000t of coke for the full year. At the start of the year the company had targeted 12.1Mt of coal and 850,000t of coke before reducing this figure.

So far this year the company has produced 8Mt of coal and 591,000t of coke, implying production of 3Mt coal in the fourth quarter and around 350,000t of coke. The company produced 12.7Mt of coal in 2008 and 1.3Mt of coke.

Mr Salamon says the company is currently negotiating contracts for 2010. “We remain cautious about the near- to medium-term outlook, but optimistic about the regional market in the longer term,” said Mr Salamon.