Financial results by operating segments

The Group is organized and managed in segments by type of products offered and type of production activity. The Group presents information on operating segments in accordance with IFRS 8 "Operating Segments". The Management Board of the Parent Company has identified operating segments based on the financial reporting of the companies comprising the Group. The Group's operations are conducted by the following operating segments:

  • Coal Segment – which includes extraction and sales of black coal;
  • Coke Segment – which includes production and sales of coke and hydrocarbons;
  • Other segments – include activities performed by the Group’s entities other than those covered by the Coal and Coke Segments, such as, without limitation, production and sales of electricity and thermal energy, repair services, etc.

The measure of the financial results generated by the Group’s distinct operating segments analyzed by the Management Board of the Parent Company is the segment’s operating profit/(loss) determined according to IFRS.

Table Operating results of the coal segment


Item

2014*

2013

2012

2011

Growth rate
2013=100

Sales revenues from external recipients

2,972.3

3,559.0

4,134.9

4,943.3

83.5

Operating profit/(loss)

(843.8)

70.1

1,268.6

2,736.3

(1,203.7)

Depreciation and amortization

1,034.8

921.8

806.0

685.8

112.3

EBITDA

191.0

991.9

2,074.6

3,422.1

19.3

* including KWK Knurów-Szczygłowice, as of 1 August 2014.

In 2014, revenues on sales to external buyers were PLN 2,972.3 million, down by 16.5% compared to 2013. This decrease is a result of the economic slowdown which caused price drops compared to the same period of 2013: coking coal prices fell by 13.3% and steam coal prices by 12.4%. The decrease of revenues on sales to external buyers was associated also with lower coal sales volume (despite inclusion of KWK Knurów-Szczygłowice into the Group’s structures as of 1 August 2014), which resulted from underperformance of production tasks in the home mines, as a result of extraordinary difficulties associated with natural hazards and difficult mining and geological conditions.

In 2014, the share of revenues on sales of coal to 5 main external customers was 80.9% of total revenues in this segment (2013: 69.6%). Other buyers, whose unit share did not exceed 10% of revenues, generated the remaining 19.1% of total revenues of the coal segment.

The 2014 EBITDA of the coal segment was PLN 191.0 million. In the same period of the previous year, EBITDA was PLN 991.9 million. Such a significant 80.7% decrease in EBITDA compared to 2013 was caused mainly by a decline in operating profit (by PLN 913.9 million) caused mainly by the aforementioned lower revenues on the sales of coal. In addition the gain on bargain purchase of KWK Knurów-Szczygłowice in the full amount of PLN 297.4 million has been recognized in the Coal Segment.

Table Operating results of the coke segment


Item

2014

2013

2012

2011

Growth rate
2013=100

Sales revenues from external recipients

3,489.2

3,704.3

4,307.9

4,220.0

94.2

Operating profit/(loss)

12.9

62.0

(97.8)

171.4

20.8

Depreciation and amortization

195.4

203.9

201.1

125.6

95.8

EBITDA

208.3

265.9

103.3

297.0

78.3

In 2014, sales revenues to external customers were PLN 3,489.2 million, down by 5.8% compared to 2013. The overall situation in the coke market caused by the global crisis translates directly into the price of coke which, in the wake of the drop in the prices of coking coal in 2014, followed a downward trend (the decrease in the average selling price of coke vs. 2013 was approx. 11.9%).

The share of revenues on the sales in the coke segment to 5 top customers represented 62.4% (2013: 61.6%). Other buyers whose unit share did not exceed 10% of revenues, generated the remaining 37.6% of total revenues of the coke segment.

EBITDA for 2014 amounted to PLN 208.3 million (in 2013: PLN 265.9 million). The decline of EBITDA in the analyzed segment by PLN 57.6 million, or 21.7%, compared to 2013, resulted mainly from a 79.2% drop of operating profit, caused by a PLN 215.1 million reduction of revenues on sales.

Table Operating results of other segments


Item

2014

2013

2012

2011

Growth rate
2013=100

Sales revenues from external recipients

353.4

368.9

378.2

213.5

95.8

Operating profit

45.5

82.9

73.7

20.4

54.9

Depreciation and amortization

80.2

83.0

65.3

36.6

96.6

EBITDA

125.7

165.9

139.0

57.0

75.8

In 2014, revenues on sales to external customers were PLN 353.4 million, down 4.2% from the same period in 2013. The segment's EBITDA for 2014 was PLN 125.7 million. The year before, EBITDA was PLN 165.9 million. The 24.2% EBITDA reduction in this segment in the analyzed period was driven mainly by a reduction of operating profit, by 45.1% compared to 2013.


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