Forbes FY13 profit hit by coal price and worker disputes

FORBES & Manhattan Coal has reported considerably weaker financial results for the full year ending February 28, blaming a softer coal export market and labor disruptions for the decline.
Forbes FY13 profit hit by coal price and worker disputes Forbes FY13 profit hit by coal price and worker disputes Forbes FY13 profit hit by coal price and worker disputes Forbes FY13 profit hit by coal price and worker disputes Forbes FY13 profit hit by coal price and worker disputes

Image courtesy of Forbes Coal

Staff Reporter

The company, which is listed in Johannesburg and Toronto, reported a net loss of $C10.15 million compared to a net profit of $2.29 million the prior year.

Revenue was $68.5 million, down from $104.5 million.

The company’s consolidated earnings before interest, tax, depreciation and amortisation for the year ending February 29, 2012 was $22.5 million but for this financial year dropped steeply to a loss of $800,000.

The company said lower revenues were due to a decline in the coal price index in its first and second fiscal quarters, as well as labor disruptions in its third fiscal quarter.

"A softening export coal market combined with lower production due to the labor disruption in Q3 2013 were the main factors impacting our profitability for fiscal 2013," president and chief executive officer Stephan Theron said in a statement on Thursday.

“We were able to reduce our operating expenses which provided some relief and cost containment will remain a priority for the company.”

On the upside, production at the company’s Magdalena bituminous mine and Aviemore anthracite mine improved in both the fourth quarter and for the year overall.

"We are pleased to report that production losses as a result of the labor disruption were offset by a record production month in February 2013 with a total of 151,000 tonnes of coal produced, a significant achievement over the 117,000 tonne monthly average of the last 12 months."

They helped push total run of mine production from all operations for the year to 1.4 million tonnes, a 9% increase on the 1.29Mt produced in 2012.

Increased ROM production in turn increased saleable coal 4% year-on-year to just over 958,000t.

The company aims to advance and expand production during the next fiscal year to meet a saleable production target of 1.1Mt, 20% higher than the target for FY2013.

“In order to achieve these goals Forbes Coal will work to increase productivity and production capacity at Magdalena through operational efficiency initiatives,” Forbes said.

Another silver lining for the company’s yearly results was the decrease in operating costs to $58.8 million from $71.06 million in the prior financial year.

Forbes holds majority interests in its South African underground mines, both with a substantial resource base and a projected life span in excess of 20 years.

The Magdalena bituminous coal project has a 51.7Mt mineable in situ coal resource consisting of 51.3Mt measured and 400,000t indicated.

The Aviemore anthracite coal project has a resource of 35.7Mt, with 1.6Mt measured and 34.1Mt indicated.

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