May 16 (Bloomberg) -- New World Resources Plc, the largest producer of steelmaking coal in the Czech Republic, jumped the most in 11 months in Prague trading after announcing plans to rein in expenses.
NWR rose as much as 8.4 percent, the biggest intraday gain since June 15, and was up 4.9 percent at 43 koruna as of 10:39 a.m. local time. Trading volumes already exceeded the three-month daily average. The stock climbed 6.1 percent in London.
The company plans 100 million euros ($129 million) of “short-term” measures to buoy finances, including a 10 percent cut in salaries, reductions in capital spending and sales of thermal-coal inventories, NWR said today in a statement. It reported a first-quarter net loss of 80.3 million euros.
Coal producers from Peabody Energy Corp. to Rio Tinto Group are scrapping or deferring investment plans to lower costs after slowing economic growth eroded demand, dragging down prices. NWR today cut its 2013 output forecast to 9 million to 10 million metric tons of steelmaking coal, from a February estimate of as much as 11 million tons.
“We consider positive NWR’s effort to cut expenses,” Bohumil Trampota, a Prague-based analyst at J&T Banka, said in a note. “The new projection slightly exceeded our estimate.”
Operating expenses will be reduced by 25 million euros this year as NWR cuts salaries and staff, the statement shows.
“We now need to plan for a tougher environment for a longer period of time,” Chairman Gareth Penny said by phone. “There’s going to be a thorough review of our entire business.”
NWR, registered in Amsterdam, has started the process of divesting its coke operations, OKK, and hopes to find a buyer by August, Penny said. It’s contacting banks to manage the sale before reaching out to potential buyers, he said.
The company will also review all current mines and may shut or mothball some unprofitable sites, according to the chairman, who said the Debiensko mine in Poland remains viable.
Prices of hard coking coal for foundries fell about 25 percent in the first quarter from the previous three months, quashing NWR’s hopes that prices may recover in the second half, he said.
Revenue dropped 31 percent to 240 million euros, while the loss before interest, tax, depreciation and amortization totaled 22 million euros, the company said, citing an “extremely difficult” market.
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