New World Resources Plc, the biggest producer of coking coal in the Czech Republic, jumped the most in two months after reporting a third-quarter profit while analysts expected a loss.
The shares rose 3.6 percent, the biggest gain since Sept. 14, to 80 koruna today in Prague.
NWR said profit in the three months through September dropped to 12.8 million euros ($16.3 million) from 34 million euros a year earlier, the Amsterdam-registered company said today in a statement. That beat the median estimate of seven analysts for a 4.4 million-euro loss in a Bloomberg survey.
“The profit numbers surpassed even the most optimistic estimates, mainly thanks to lower operational costs,” Bohumil Trampota, an analyst at J&T Banka AS, said in a note. “Nevertheless, the outlook for the rest of the year and for 2013 is difficult.”
Europe’s debt crisis has damped demand for coking coal as steelmakers such as ArcelorMittal brace for slowing economic growth and global metallurgical-coal prices have tumbled this year on a manufacturing slowdown in China. While NWR’s third-quarter revenue fell 20 percent to 319 million euros, the miner cut operating costs and managed to report a net profit.
“The results were clearly affected by the current market environment, you see a significant drop in revenue year on the year,” Marek Jelinek, the company’s chief financial officer, said in a telephone interview. “Where we did deliver was in controlling operational expenses.”
NWR cut its full-year sales target on Oct. 1 to a maximum of 10.3 million tons of coal, split equally between thermal and coking coal. The company also expects to sell between 600 kilotons and 700 kilotons of coke this fiscal year.
Demand for coking coal is slowing among European steelmakers and carmakers as the European economy continues to suffer from the sovereign debt crisis, Jelinek said. Operating income plunged 66 percent during the third quarter.
“The market visibility right now is extremely poor,” the executive said. “Current expectations of eco growth don’t bode well for any significant growth in production next year. That will probably depress demand for coking coal.”
NWR owns four mines and two coking facilities in the Czech Republic and sells to customers in central Europe, including the Czech unit of ArcelorMittal, the world’s largest steelmaker. Gareth Penny became the executive chairman on Oct. 1., replacing Mike Salamon.
The company is reviewing its plan for the Debiensko mine in Poland where it encountered unexpected technical difficulties. NWR cut planned investment in the mine to 5 million euros from 50 million euros and is carrying out a technical review which it expects to complete early next year, it said.