Red ink still flows at Solid Energy

The red ink continues to flow at Solid Energy with the state coalminer posting a $40.9 million after-tax loss for the half-year and warning of a drawn-out recovery.

The result announced today compares with a previous half-year loss of $318m when Solid Energy slashed the value of many of its operations by nearly $223m.

For the six months to December 31 2013 its revenue slumped 29 per cent to $236m, compared with the previous first half.

That was due to hard coking-coal prices falling 14 per cent, New Zealand customers taking about half the coal they did the half year before, and restructuring and redundancies costing the company $12.4m.

Solid Energy acting chairwoman Pip Dunphy warned: "The company's financial recovery is likely to be prolonged and will depend on a number of factors including continuing improvement in its business performance and higher prices in international coal markets."

The high New Zealand dollar was also hurting profitability, she said.

The volume of coal sales declined 21 per cent to 1.7 million tonnes in the half year.

While export sales were up 10 per cent, New Zealand sales fell 47 per cent with two big customers, Genesis Energy and New Zealand Steel, taking 47 per cent less coal in the half year as a result of changing supply agreements.

During the half year the company completed a huge restructuring with more jobs axed at Stockton mine on the West Coast and Huntly East in the Waikato.

At the end of last year Solid Energy employed 867 people, compared to 1237 at the end of December 2012 and 1658 on July 1 2012.

Costs had fallen by $74m to $255.5m due to the big reductions in staff and a review of all operations and mine plans. That had meant a $22m reduction in plant and equipment costs and a $20m drop in contractor costs.

Fairfax Media