HWANGE Colliery Company (HCC)’s net profit tumbled 26% to US$ 3,1 million in the full-year to December 31 2012, weighed down by increased finance costs which more than doubled.
Finance costs increased to US$4,1 million compared to US$1,8 million the previous year, in correspondence with the growth in borrowings to US$31,6 million, up from US$24,9 million.
HCC chairperson, Farai Mutamangira, however, said loans had been rescheduled to periods of up to 24 months and were currently being serviced through ring-fencing of specific customers while borrowings below US$1 million were liquidated on the basis of arrangements with lenders.
The debts are expected to be fully retired in the long-term, depending on the improvement in production volumes.
“The permanent remedy to the debt situation will yield automatically when production volumes increase to achieve the targeted design capacity” said Mutamangira.
“The incremental revenue is expected to retire most of the overdue trade creditors,” he added.
Turnover reduced to US$104,2 million compared to US$107,9 million achieved in the previous year on the back of a 25% decrease in sales volumes. This followed the unprecedented reduced uptake of coal by the Zimbabwe Power Company.
Total coal sales dropped to 1,9 million tonnes compared to 2,5 million tonnes in the comparative period.
Export sales, however, grew by 28% to 260 803 tonnes against 203 096 tonnes the previous year.
Consequently, export revenue grew to US$26,1 million, contributing 25% of turnover, compared to US$13,4 million the previous year.
Coal sales, including breeze, were 228 201 tonnes, up by 205% from the previous year, while the bulk of the coke sales were from South Africa and Zambia.
The company said operations continued to be affected by archaic mining equipment, resulting in increased operating costs.
Mutamangira said the company had managed to conclude mining equipment supplier deals worth US$32 million in order to improve operations.
Equipment valued at US$6,35 million had already been acquired from South Africa through a short -term funding facility with a major customer. The equipment was commissioned last year in December and had significantly improved operations at Chaba pit where it was deployed.
Going forward, the company said it would focus on project finance with a view to unlocking working capital to service current liabilities.