Hundreds of millions in prizes and now a big loss. Former minister on the situation at JSW

On Wednesday, Jastrzębska Spółka Węglowa published data for the third quarter of 2023. They show that in this period it had a net loss of PLN 1.2 billion. The company reported that the inclusion of the solidarity contribution in the amount of PLN 1.6 billion had a significant impact on the net result (the impact of the contribution on the net result after taking into account the tax effect is PLN 1.3 billion).

The unfavorable data caused the shares of Jastrzębska Spółka Węglowa to decline significantly. On Thursday, JSW prices fell by over 12%. – at closing, one share of the company had to be paid PLN 42. On Friday morning, the decline deepened slightly – before noon the share price was around PLN 41.80.

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In the context of JSW, it is worth recalling the bonuses the company paid out in July and October. The summer “motivational one-off bonus” cost over PLN 262 million. The “additional one-off bonus” paid shortly after the elections cost another PLN 375 million. In total, these two employee allowances alone cost PLN 637 million.

For nine months of the year, JSW, whose majority shareholder is the State Treasury, spent PLN 5.7 billion on “employee benefits”. A year earlier, in the same time period, expenses amounted to PLN 4.3 billion. This means an increase in spending by PLN 1.4 billion. This is an increase of approximately 33%.

Janusz Steinhoff, former deputy prime minister, minister of economy in Jerzy Buzek’s government, currently an expert on the BCC energy market, in an interview with money.pl emphasizes that Jastrzębska Spółka Węglowa is a listed company and for everything that happens there, including rewards for employees, the management board and supervisory board should be responsible.

– I believe that public discussion about this or that employee compensation is always flawed because we do not know all the conditions. However, some things cannot be hidden. It is the responsibility of the management board to manage the company in such a way that it obtains maximum profits in the current market situation. That’s what the supervisory board is for, to enforce these obligations from the company’s management, he says.

Over the last eight years, ownership supervision over the mining industry has been very poor. Despite the fact that JSW is a listed company, nominations to the management board are often given to people who only have political qualifications. This proves one thing. The current government has no control over the situation. He avoids any actions that could bring him into conflict with trade unionists. However, he pays insufficient attention to the current results and future of companies, says Janusz Steinhoff.

With regard to the bonuses that were paid both in October and July, the money.pl interlocutor emphasizes that employee salaries should depend on the financial condition of the company. – And that hasn’t been the case lately. JSW employees received two one-off awards, amounting to several thousand zlotys per person. And they consumed in total – I’m talking about funds paid in July and October – over half a billion zlotys. This second tranche was paid shortly after the elections. Which, in my opinion, is unjustified, not to mention harmful, says the former deputy prime minister.

I have nothing against rewarding employees if the results are good and the company’s condition is good. However, this move on the part of the management board was of a nature that could be assessed as politically motivated. Since the funds were disbursed around the election, this could be seen as a clear suggestion. This is incomprehensible to me. Why is so much money paid out at once? Of course, I am aware that trade unionists are trying to ensure that miners earn more and more, just like any other professional group. However, you must be aware that wages are decided by the management board, which must weigh all conditions. Including the financial condition of the company and its future prospects – he estimates.

We also asked the former minister whether JSW could have predicted that the situation on the coal market might change at the end of the year.

– Just a dozen or so months ago, the prices of both thermal coal and coking coal – both of which are mined by JSW – were soaring. Both these markets are governed by slightly different laws – explains Janusz Steinhoff.

He also emphasizes that the energy market is more stable unless there are factors such as an embargo on energy supplies from the Russian Federation, which is a consequence of the attack on Ukraine.

– When oil and gas prices go up, coal also goes up in price. Coking coal prices are a function of the economic situation, among others. in infrastructure investments, the situation in the steel industry. Currently, these prices are much lower than at the beginning of the year, he points out.

The former Minister of Economy also emphasizes that we must be aware that in every company there are employee expectations and opportunities that the management should take into account. – This is a matter of negotiation, but wages should take into account all these conditions. Also the situation on the labor market – he says.

In his opinion, the coming years will not be easy for the mining industry. All because of the increasingly complicated market situation.

I think that in the coming years we may face an employment deficit in mining, they will not be willing to work in mines. Wages in mining will be an insufficient incentive for employment in mines – says Janusz Steinhoff.

These theses are already partially confirmed by the data. According to recently published data, there is a decline in JSW’s revenues from the sale of coal to external customers. After three quarters, transactions reached the value of PLN 6.908 billion, which means a decrease of 22.9%. year to year (y/y).

The company notes that the average total sales price of coal during the nine-month period was PLN 1,037.43/t and was lower by 11% year-on-year. The price of coking coal decreased by 28.8%, and the price of coal for steam purposes increased by 90.3%. As stated, the obtained average sales price of total coal was influenced, among others, by the change in the sales structure, i.e. a decrease in the share of steam coal in total sales.

According to JSW in a press release, the EBITDA profit of the coal segment after three quarters of 2023 amounted to PLN 3.85 billion, and in the corresponding period of the previous year, the company had PLN 8.27 billion EBITDA.

In the Coke segment, the company recorded an EBITDA loss of PLN 445.6 million compared to PLN 765.4 million in profit a year earlier. In turn, EBITDA of other segments amounted to PLN 254 ​​million in this period, compared to PLN 174.8 million a year earlier.

It is not known whether these results will prevent the implementation of the demands put forward by trade unionists at the beginning of November. According to them, in 2024, the wages of over 21,000 JSW employees would increase by at least one percentage point above this year’s inflation.