UK Coal's £100m loss for second year running
The UK's biggest coal producer has admitted to 'deep-rooted problems' after it recorded losses of more than £100m for the second year in a row.
Doncaster-based: UK Coal employs nearly 3,000 people
Doncaster-based UK Coal, which has three deep mines in the Midlands and Yorkshire and employs nearly 3,000 people, has already taken some 'immediate and difficult' steps to improve performance while it works on a full strategic plan that it hopes will identify a viable business model.
In a stark assessment of the business, new chairman Jonson Cox said production levels were consistently short of expectations, while costs have grown 'relentlessly' with labour costs per employee up to £61,000 from £44,000 in 2006.
It reported pre-tax losses of £124.6m for last year, following on from £129.1m in 2009 and £15.6m the year before.
While deep mine production improved slightly to 7.2m tonnes, the company's Daw Mill colliery near Coventry suffered a four-month 'face-gap' as a result of its failure to open a new panel of coal before the previous face was exhausted. The company warned it faced a similar situation this year.
Mr Cox, who joined the company in November, said: 'It will be clear to those who have followed UK Coal that the causes of these severe losses are deeply rooted and require a complete overhaul of strategy and execution.'
The company has saved £12m by withdrawing an inflation-linked pay award and reducing the size of its head office, while it has warned of the need to close the current final salary pension schemes.
Mr Cox added: 'The urgent need for further change has been communicated clearly to all colleagues and unions and we believe that the message is understood.'
UK Coal, which meets around 5% of the UK's electricity needs, added that a wide-ranging strategy review was well advanced and should identify steps needed for its deep and surface mines and its property division.
The company said total debt rose to £242.4m last year but that its banking facilities had been renewed to July 2012.
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