Solid Energy plunges

Don Elder
Don Elder
State-owned enterprise Solid Energy has finished a forgettable financial year, with its after-tax profit plunging 146% to a loss of $40 million and no repeat of last year's $30 million dividend.

Once mooted by the Government as being in a clutch of state-owned enterprises to be floated on the stock exchange, Solid Energy could be years away from any float.

Revenue, coal sales and exports were mostly in double figures the previous year, but those gains were undermined by a 40% plunge in the global price of specialist hard coking coal, prompting the loss of almost 500 jobs across Solid Energy.

While affecting staff across the country, hardest hit was Greymouth on the West Coast, where 220 jobs were lost at the Spring Creek mine and adjacent processing plant.

Solid Energy chief executive Don Elder shocked the resource sector in mid-August by announcing a likely $200 million revenue slump this financial year, and was prompting a wide-ranging review of all its operations, shortly after beginning with the first of a series of redundancy proposals leading to loss of 445 jobs by mid-October.

Revenue for the year to June was up 18% at $978.4 million, cash flows up 10% to $142.2 million, coal sales up 13% to 4.6 million tonnes, but in order to counter plunging coal prices, Solid Energy booked $110 million in impaired asset charges (on its closed or restructured assets) which slashed the previous full year's profit of $87.2 million to a loss of $40.2 million.

Yesterday, Dr Elder said he now expected prices to remain "weak for one to two years, compounded by the continuing strong New Zealand dollar".

"Despite this, major companies in our sector remain bullish in the long-term due to continuing global urbanisation and industrialisation," Dr Elder said in the annual report.

Since 2009, capital investment, including $120 million in a processing plant at Stockton mine, had increased debt by $257 million. During the past year total liabilities, driven by increased borrowing, went up 21% for Solid Energy, from $614.1 million a year ago to $743.5 million, he said.



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