While the result was still up from the $34 million posted in 2008, Solid Energy chairman John Palmer said the second half of the year was “extremely difficult for the company”

Revenue and profits were above plan through to October 2008 with hard coking coal selling for $US300 per tonne, but by November international steelmakers were running down coal stockpiles and cutting production due to the worldwide reduction in steel demand.

By January spot coal prices had fallen below $US100/t and thermal to $50/t.

Customers began to defer export shipments and seek substantial price reductions.

“Every planned December coal shipment was deferred and, through to June, customers continued to cancel or defer significant contracted volumes, impacting heavily on all areas of the business,” Palmer said.

Solid’s base revenue for the year was $NZ980 million, which was helped along by its 51% share of Spring Creek sales of $39 million.

Coal exports for the year were 1.8 million tonnes and domestic sales were 2.2Mt.

“During the year, we committed to a number of important capital projects to secure future value, but these will draw heavily on our balance sheet over the next few years. Our operating cash flows will be lower than forecast previously and our debt will increase,” Palmer said.

“The company will need to work hard over the next 12 months to deliver this major capital investment program on time and on budget.”

Solid has committed about $NZ200 million to a new coal processing plant, mine expansion and development, new plant and equipment, and site infrastructure upgrades.

In November last year it signed a new five-year agreement for coal supply to New Zealand Steel, securing the medium-term future of the Huntly East mine and triggering a $NZ100 million investment in a northern extension of the mine.