28% revenue fall for Solid Energy

Continued weak international coal prices contributed to a 28% fall in revenue in the six months ended December for troubled Government-owned coal producer Solid Energy.

It was withdrawn from the Government's mixed ownership model partial floats when the level of its debt was revealed. Revenue in the six months fell to $236.1 million from $328.1 million in the previous corresponding period.

Before interest and tax, the state-owned enterprise had a loss of $29.7 million compared to a loss in the pcp of $265.5 million.

Operating profit was $15.2 million, down 17%, and the net loss after tax was $12.2 million, compared to a loss of $321.7 million in the previous period.

The underlying loss, which excluded impairments and large one-off items, was $28.7 million, compared with a $3.5 million profit in the pcp.

Operating cash flow was negative $1.2 million compared with negative $55.8 million in the pcp, with $89.6 million in decreased cash receipts from lower prices and reduced domestic demand. Capital investment totalled $5 million compared with $47.4 million in the pcp.

Acting chairwoman Pip Dunphy said the half-year result was slightly better than expected as the company maintained a strong focus on production efficiency, cash management and on containing operating costs.

''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.''

The hard coking coal spot price weakened in the period, with the monthly average for December down to $US135 ($NZ161) a tonne compared with $US159 a tonne in December 2012.

The company's financial recovery was likely to be prolonged and would depend on several factors including continuing improvement in the business performance and higher international coal prices, she said.

The slightly better than expected result meant the company had not needed to draw down under the two $50 million working capital facilities made available by the Crown as part of the financial restructuring package put in place last October. During the period, the company completed a major restructuring of its business which started in August 2012.

Management and support jobs were cut at the Stockton mine and further changes were made at Huntly East, cutting production to about a third of the previous year's as the economics of mining underground at Huntly could no longer justify keeping the operation going in its current form, Ms Dunphy said.

At the end of December, Solid Energy employed 867 people, compared with 1237 at the end of December 2012.

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