Wescoal returns to profitability

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Coal_mining

inlsa

Wescoal Holdings (WSL) has returned to profitability in the year ended March 2012, with headline earnings per share from continuing operations of 11.4 cents, after a 8.1 cents loss a year ago.

Revenue was up 13.1% to R630.8 million and operating profit came in at R26 million after an operating loss of R21.4 million a year ago. EBITDA increased from a loss of R6.2 million to a profit of R45.3 million.

No dividend was declared.

The results reflect the final sale of the Blesboklaagte beneficiation plant in the discontinued results of the group. An after tax profit of R2.9 million was made on the sale of the plant and substantial rehabilitation work was done on the Witbank site and recouped from the proceeds of the sale.

Continuing operations within the group, which include coal mining, processing and trading, reflected a 13.1% growth in revenue of R73.1 million.

The mining division achieved revenues of R291 million and EBITDA of R47.2 million from a total of 1.52 million tons of coal, while the trading division revenues grew by 13.2% generating EBITDA of R7.0 million.

Management said it is confident of strong growth going forward and is focused on maximising profitability of the divisions.

The mining division's focus on supplying Eskom with quality product and disposing of all other associated operations was proving to be a valid strategy, the company said.

“Deliveries to Eskom continue unabated however negotiations are at an advanced stage to secure a three year contract to include the Vlakvarkfontein resource,” the company added.

In the Trading division, Transnet Freight Rail (TFR) railings to Richards Bay Coal Terminal (RBCT) for the calendar year to April 2012 totalled 23.8 million tons - an annualised rate of 71.5 million tons.

The increase on the 2011 calendar year of 5.8 million tons was primarily being taken from domestic coal supply resulting in shortages of sized coal for the domestic market.

Despite export prices decreasing to as low as $82, the railings continue and domestic prices have increased with demand remaining strong.

Management believes the trading environment will show significant improvement in the next financial year.

Looking ahead, the group said it was expected that the trading division would continue to experience strong demand and with the large producers' focus on export, restricted supply would continue.

The mining division would continue at maximum production and with Vlakvarkfontein coming on stream later in the year, increased profitability was forecast going forward.

Overall management expects strong growth in both divisions for the year ending March 2013 with the Vlakvarkfontein resource contributing substantially from there on. - I-Net Bridge


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