OREANDA-NEWS. May 11, 2012. OJSC “Kuzbasskaya Toplivnaya Company” (RTS/MICEX: “KBTK”), one of the fastest-growing thermal coal producers in Russia, is pleased to announce its operational results for the first quarter 2012.

Quarterly Operational Results1Q1 2012 % of total Q42011 Ch. Q1 2011 Ch.2

Coal production,
 (mln. tonnes) incl.: 2.18   2.56 -15% 1.83 19%
Karakansky South 0.75 34% 0.87 -14% 0.69 9%
Vinogradovsky 0.37 17% 0.59 -37% 0.44 -16%
Cheremshansky3 1.07 49% 1.10 -3% 0.71 51%
Sorted coal 1.59 73% 1.52 5% 1.17 36%
Enriched coal 0.20 9% 0.19 5% 0.16 25%
Sales volume 4,
 (mln. tonnes), incl.: 2.81   3.34 -16% 2.43 16%
Export sales volume 1.61 57% 1.77 -9% 1.40 15%
Domestic sales volume 1.21 43% 1.57 -23% 1.03 17%
Own coal 2.17 77% 2.60 -16% 1.92 13%
Coal re-sale 0.64 23% 0.74 -14% 0.51 25%
Average selling price5,
 RUB/tonne 1,352   1,285 5% 1,193 13%
Average export price 1,440   1,367 5% 1,203 20%
Average domestic price 1,233   1,192 3% 1,178 5%

In Q1 2012 in comparison to Q4 2011 the results decreased because of thermal coal consumption seasonality in Russia. The major part of thermal coal is used domestically for heating power generation, therefore its demand peaks in Q4 of every year and then starts to fall in Q1 when the heating season comes closer it its end. At the same time, an analysis of Q1 2012 operational results of the Company in comparison with Q1 2011 shows that all production and sales figures in the reporting period exceeded the corresponding figures of the previous year.

In Q1 2012 the Company produced 2.18 mln. tonnes of coal, decreasing production volume by 15% quarter-on-quarter (Q4 2011: 2.56 mln. tonnes). On the other hand, the volume of coal production increased by 19% year-on-year (Q1 2011: 1.83 mln. tonnes).

Enriching plant “Kaskad”, which produces export quality coal, continued work at level close to 100% capacity. The volume of quarterly production of enriched coal increased by 5% to 0.20 mln. tonnes (Q4 2011: 0.19 mln. tonnes).

In the Q1 2012 the volume of coal sorted by coal-crushing and screening units increased by 5% and amounted 1.59 mln. tones (Q4 2011: 1.52 mln. tonnes), up 36% higher than Q1 2011 (1.17 mln. tonnes).  The stability of this volume reflects a high demand for sorted coal among export clients of the Company, shipments that are not so affected by seasonality factors. 

The volume of coal sales in Q1 2012 decreased by 16% to 2.81 mln. tonnes (Q4 2011: 3.34 mln. tonnes) because of decrease of shipments to Eastern Europe. The Company sold 2.17 mln. tonnes of own coal and 0.64 mln. tonnes of coal purchased from third-parties and processed 0.20 mln. tonnes of coal. Export sales rose slightly from 53% to 57%.

Coal sales in the domestic market decreased by 23% at the completion of the heating season and the seasonal decline in demand and amounted 1.21 mln. tonnes (Q4 2011: 1.57 mln. tonnes). The export volume fell by 9% to 1.61 mln. tonnes compared to 1.77 mln. tonnes in Q4 2011. It should be noted the growth of exports compared to the Q1 2011, amounted to 15% (Q1 2011: 1.40 mln. tonnes).

In Q1 2012 Company’s largest export markets remained Eastern European countries (42% of export volume) and Asia-Pacific region (57% of export volume). Export deliveries to customers in Eastern Europe decreased in Q1 2012 by 30%, reaching a level of 0.68 mln. tonnes (Q4 2011: 0.97 mln. tonnes) due to significant coal reserves in warehouses in Poland. Deliveries in the Asian-Pacific region grew by 15% and amounted to 0.92 mln. tonnes of coal (Q4 2011: 0.80 mln. tonnes).

In Q1 2012 the average price of coal increased by 5% quarter-on-quarter to RUB 1,352 per tonne net of VAT and railroad costs (Q4 2011: RUB 1,285 per tonne). The average domestic price increased by 3% to RUB 1,233 per tonne (Q4 2011: RUB 1,192 per tonne). The average export price continued its growth and reached RUB 1,440 per tonne, exceeding Q4 2011 price by 5% (RUB 1,367 per tonne). The average export price in the Asia-Pacific region reached RUR 1,472 per tonne, showing an increase of 18% compared to the Q4 2011 (RUR 1,250 per tonne) and an increase of 33% compared to the Q1 2011.(RUB 1,105 per tonne). The average selling price in the European market amounted RUB 1,421 per tonne.

Management of the Company is satisfied with the operational results of the first quarter 2012.

The Company plans to release its unaudited interim 3M 2012 IFRS Statements on May 23, 2012. A conference-call to discuss the financial results will be held the same day at 5 PM Moscow time (2 PM London time, 9 AM New York time). Conference call details will be issued separately.