Reviewed Interim Results For The Six Months Ended 30 September 2009
- Revenue down 27%
- Operating profit down 69%
- Headline earnings down 62%
Gross margin reduced to 8.7% from 11.3% in the comparative period mainly due to the competitiveness experienced in the pricing explained above. The group has adopted a retention of volumes policy and margins will therefore remain under pressure for the next twelve months. This policy will however ensure a strong customer base when pricing and volumes turn in the soon expected upturn in the domestic coal market.
In anticipation of the coal price decrease and the lower demand from industry the group started a cost reduction strategy. As a result operating costs are 7.8% down on prior year and this campaign will be intensified during the second half of the financial year. Additional cost saving items have been identified and will be maximised as soon as possible.
During the previous financial year management identified the possibility of releasing the debt linked to the purchase of a coal reserve with the repurchase of Wescoal shares. This exercise realised a pre tax profit of R3.6m which is not reflected as headline earnings but contribute a significant amount to group earnings.
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