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After a while the bad numbers lose some of their shock value, but this one is still rather staggering.
A year ago, Store Norske had nearly 1.3 billion kroner in equity. As of the end of last month, it has 73 million kroner.
That’s a fortune for a private household, but a pittance for a major corporation and a reflection of just how devastating a collapse in coal prices has been for the company and for Longyearbyen, which could see a quarter of its 2,100 residents forced to leave by next summer.
Perhaps the worst part is it’s not all that unexpected – and the earnings report released this week revealing the depreciation isn’t as bleak as the others released during the past year.
Store Norske reported a third-quarter loss of 106.5 million kroner for the third-quarter of 2015, bringing its total loss for the year to 340.8 million kroner. That’s somewhat better than the 140.4-million kroner loss the company reported during the same quarter a year ago, when the magnitude of the crisis became apparent.
The company has lost a total of 340 million kroner during the first nine months of 2015, compared to 225 million for the same period a year ago. But the 2014 figure is deceptive – the company initially reported a record loss of 537 million kroner at the end of the year, but a subsequent write-down of fixed assets increased the loss to 902.2 million kroner.
That write-down, plus an additional write-down of assets this quarter, is the reason for the company’s reduced equity, wrote Wenche Ravlo, Store Norske’s administrative director, in an e-mail interview. She stated the reduced equity will not affect the company’s future operating plans.
The company ended the third quarter with liquid assets of 459 million kroner, 358 million higher than a year ago, according to the report.
Much of the reason for the lower third-quater loss compared to last year is a major downsizing of the company’s workforce and operations. The company laid off about 100 of its 370 workers at the beginning of the year – another 150 or so are scheduled to be let go by next summer – and has scaled back mining operations to only its most profitable deposits. Most of that work will be halted by next summer as well, as work at Svea and Lunckefjell will cease and only the relatively small extraction from Mine 7 will continue.
The company reported 393.4 million in income for the third-quarter (including 357.2 million from coal sales), compared to 478.5 million (and 461.1 million) a year ago.
The company is requesting nearly $300 million kroner from the Norwegian government to maintain Svea and Lunckefjell for up to three years in the hope coal prices recover. Ravlo stated there have not yet been any indications about whether the funding will be approved.
