New World Resources Reports First-Half Loss; Plans Energy Sale

By Douglas Lytle

Aug. 19 (Bloomberg) -- New World Resources NV, the Czech Republic’s biggest supplier of coking coal, reported a first- half loss as it cut production on weaker demand, and said its board agreed to sell the company’s energy business.

NWR posted a net loss of 41.4 million euros ($58 million), following net income of 189 million euros a year earlier, the Amsterdam-based company said in a statement today. Sales from continuing operations fell 48 percent to 484.4 million euros.

The company, which sold shares in a 2008 initial public offering in Prague, London and Warsaw, in May cut its 2009 output target to 10.5 million metric tons from 12.1 million tons because of “considerably lower” demand and higher inventories.

“I would hope we would be profitable and cash generative in the second half,” Chairman Mike Salamon said today in a phone interview from London.

Coal production fell 17 percent from a year earlier in the first half and coke production declined 40 percent, NWR said.

The company reported a net loss of 39.3 million euros in the second quarter, compared with net profit of 71.3 million euros a year earlier. The result beat the median estimate of a 20 million-euro loss in a Bloomberg survey of six analysts. Revenue from continuing operations was 243.9 million euros in the period, down from 463 million euros.

“Market conditions were difficult for NWR throughout the first half,” Salamon said in the statement. “NWR’s core customer markets are beginning to show some signs of recovery. Sales volumes have been rising since June and our inventory levels have therefore started to fall.”

The board agreed to sell the company’s energy business and said the development “is in line with our strategy to focus on our core business of coal mining and coke production, and also in order to strengthen our balance sheet,” the statement said.

NWR supplies hard coal and coke to customers such as the Czech unit of ArcelorMittal, the world’s largest steelmaker, and U.S. Steel Corp.’s division in Slovakia. It also produces coal used by power plants.

To contact the reporters on this story: Douglas Lytle in Prague dlytle@bloomberg.net