UK Coal expects annual loss on output snagsadmin
The country’s biggest coal producer, UK Coal , said on Friday it expected a loss for the full year due to a shortfall in output, but that an improvement could be expected within 15 months.
The firm said in a trading statement that production from its deep mines unit would be between 3.9 million tonnes and 4.1 million tonnes in the second half of the year.
UK Coal said in September it expected output to be around 4.5 million tonnes for the six months to end-December.
“The shortfall in deep mining output … will impact the group’s profit and operating cash flow for the second half, and lead to a loss for the year as a whole,” UK Coal said in a third-quarter trading update.
The Doncaster, England-based company is still losing money because it has to honour a number of long-term “legacy” contracts, which means it is supplying coal at prices well below what it might currently get.
UK Coal, which provides around 7 percent of the coal used in the country’s power stations, has been hit by snags at nearly all its mines.
“Although production has now recovered to the rate that we had anticipated at all mines except for Maltby, the disruption continued through most of September and the lost production of some 422,000 tonnes is not likely to be recovered in the fourth quarter,” UK Coal said.
The firm, which has a market value of around 330 million pounds, said in July it expected to post a first-half profit of 7 million pounds, against a loss of 31 million pounds a year earlier.
UK Coal, which has undergone extensive restructuring while expanding into power generation through coal-bed methane and windfarms, said it “remains on track to deliver substantial value to shareholders”.
“The group continues to make good progress towards planning approvals at a number of our key property sites and the deep mines will offer a significantly improved financial profile over the next 15 months as we come to the end of some of our legacy contracts and can access market pricing for most of our output,” it said.
The company, whose shares have touched all-time highs in recent months on takeover speculation, has a property portfolio valued at more than 250 million pounds.