New World Resources (NWR), owner of the largest mining company in the Czech Republic, OKD a.s., reported its 2Q07 results today. In 2Q07 EBITDA increased by 52.3% to CZK 2,547 million. We had expected growth of around 25% but the results were above our expectation. We attribute the strong growth to higher coal and coke prices which increased by 9.98% and 18.95% respectively in 2Q07 vs. 2Q06.
In addition, we believe that overall restructuring which separated or transferred the non-core businesses helped to increase NWR efficiency; as a result EBTDA margin increased from 17.17% in 2Q06 to 26.0% in 2Q07. It is assumed that the comprehensive restructuring will continue to improve NWR operations in the future. Moreover, the situation in CEE region benefits NWR as the consumption of coal should be driven by economic growth.
Overall, 2Q07 results illustrate that management decisions set NWR on the right track to further strengthen its position and to improve its profitability. Furthermore, we see it positively that Hans-Jorg Rudloff, Bessel Kok and Pavel Telicka are new members of NWR’s managing board as they all have rich experience which will be beneficial for the company.