JSW Group, a major player in the coal sector, reported a net loss of 793.7 million złoty in the third quarter of 2025, reflecting ongoing challenges in the steel and coal markets. Despite a slight increase in quarterly revenue, the company faces significant financial pressures, including a year-to-date net loss of 2.8 billion złoty. The stock price saw a modest increase of 0.22% in recent trading, indicating a cautious market response to the company’s restructuring efforts and future guidance.
Key Takeaways
* JSW reported a Q3 net loss of 793.7 million złoty.
* Revenue increased by 0.8% quarter-on-quarter.
* The company is undertaking aggressive cost-cutting measures.
* Global steel production declines impact demand for JSW’s products.
* The stock price rose 0.22% in recent trading.
Company Performance
JSW’s performance in Q3 2025 highlights the challenges facing the coal industry, particularly in Europe. The company’s revenue increased slightly by 0.8% compared to the previous quarter, but the overall financial picture remains bleak with a significant net loss. The decline in global and European steel production has adversely affected demand for coking coal, a key product for JSW.
Financial Highlights
* Revenue: 290.5 million złoty (0.8% quarter-on-quarter increase)
* EBITDA: -528.6 million złoty
* Net Loss: 793.7 million złoty in Q3
* Year-to-date net loss: 2.8 billion złoty
* Working capital: -1.4 billion złoty by September
Outlook & Guidance
Looking ahead, JSW plans to increase its production run rate to 13.5 million tons by 2026. The company is focusing on significant cost reductions and seeking support from the State Treasury. Negotiations with trade unions are ongoing to adjust salaries and employment levels, and JSW is exploring additional funding sources to stabilize its financial position.
Executive Commentary
CEO Bogusław Oleksy emphasized the need for flexibility in cost management, stating, “We have to be much more flexible on a cost basis.” Oleksy also highlighted the importance of restructuring, saying, “We want to restructure the group very strongly,” reflecting the company’s commitment to navigating the current market challenges.
Risks and Challenges
* Declining steel production globally and in Europe, reducing demand for coking coal.
* Significant declines in coking coal and coke prices.
* Ongoing financial losses and negative working capital.
* Potential disruptions from restructuring efforts and negotiations with trade unions.
* Dependence on external funding sources and State Treasury support.
Q&A
During the earnings call, analysts questioned the potential for a voluntary redundancy program, targeting 3,100 to 6,000 employees, as part of the company’s cost-cutting measures. Discussions with the State Treasury and trade unions were also a focal point, as JSW explores merging mining centers to improve efficiency and considers various capital support scenarios.
Full transcript – Jastrzebska Spotka Weglowa SA (JSW) Q3 2025:
Unidentified Opening Speaker, JSW Group: Ladies and gentlemen, I would like to welcome you very cordially to the results conference, where my two colleagues will join me from the management board. We’ll talk about the results of the group for Q3 and the first nine months of the year. Before we go on to delivering a presentation concerning these results, I’d like to say a few words about the current situation and position of the company. As we’ll present the market context in a moment, this is not favorable to us, so we see the down conditions on the steel market and what’s happening in our business. This is not conducive to us achieving our intended results. When we talk about the FX rate, this is problematic for our FX exposure in terms of the situation of the company.
As you’ve capably noted previously, the funds we have available at the closed-end investment fund are dwindling, and we’re at the final stages of paying out the final amounts from that fund, closed-end investment fund. This is a strong reason for us to commence — we started two months ago — the process of restructuring, reorganization of the company. Here we should highlight that without clear and decisive actions, the company in the near future would have difficulties with respect to liquidity. At the current time, the St. Barbara’s Festival is not something we can celebrate the way we have usually done that in the past because the position of the company is challenging. Despite these difficulties, I would like to thank our employees for the accomplishments and achievements they’ve made up until now.
I hope that we’ll be able to wrap up the year at the level that we had assumed. Personally, I’m of a good mind here, of good opinion. As I started, we began October, or we kicked off the process of restructuring, reorganization. Personally, for two months, in essence, I’ve been participating in a very clear fashion. We have a large number of challenges linked to the consultations, negotiations with the social party, with financial institutions, with the owner. The work we’re doing is in progress. These meetings are being held on a regular basis. For the entire time, we’re looking for the best possible solution for the company to be able to navigate the upcoming period as best as possible in an undisturbed fashion.
Yesterday’s information gave some hope that the Ministry of Energy is revisiting our application to reimburse or refund the windfall tax. That, of course, does not mean that this decision will be in our favor. However, undoubtedly, we treat this as a statement of accepting our point of view and that the Ministry will once again reexamine our application for a refund of the windfall tax. What also is important is that we are working at present on crafting a concept with respect to the overall reorganization effort jointly with our employees. We’re using in-house resources. We’ve completed our cooperation with respect to the support in these processes. We’re convinced that what we’ve prepared, these efforts that we’ve prepared, will be conducted successfully.
If you’ll allow me now, after having made this initial statement, we’d like to go to the slide, which recaps what’s happened over the last quarter. Perhaps I’ll begin with the main bullet points about our group. If you look at coal production during the most recent quarter, it was in excess of 3.3 million tons. This is a slight decline compared to the previous quarter. My colleague will drill down in detail in just a moment. If we look at coal production, we see that it’s up by more than 20%. This is something that we should embrace with satisfaction. The number of active long walls at present, we have 22.2 active long walls, which is an increase of essentially two long walls. The mining cash cost in term has — well, we’ve managed to decrease the MCC over the previous quarter.
Sales revenues have also grown slightly, so this is something we welcome with satisfaction. The average price of cooking coal and coke, unfortunately, this is what I mentioned at the beginning, that we have a downward-moving market. My colleague Jolanta Gruszko will talk about in just a few moments. In both cases, or in both products, we see price declines. EBITDA has a bigger negative figure in Q3. It’s bigger than in Q2, which is also negative. As a result, then that result, well, that loss basically increased in Q3 to 793.7 million złoty. If we look at the operating results, I’d like to ask my colleague to go ahead and say a few words about that. Ladies and gentlemen, if we look at coal production, so if we measure Q3 of this year to Q2 of this year, it’s at a similar level.
We have 3.3 million tons of production. But if we look at the first nine months of this year versus the first nine months of last year, we’re up by 5.1%. We have more cooking coal and less steam coal. This is in line with our target mix as the market would expect. If we look at the quarter works and the parcels that have been available to mine coal, and we compare Q1, Q2, it’s very stable. We have more than 17,500 meters. If we do a comparison of the first nine months of this year versus last year, there’s a slight decline, but this is a matter of stabilization.
If we look at coal production, it’s up by more than 20%, by more than 26% quarter on quarter, but it’s pretty stable if you look at the first nine months of the year. I would ask our Chief Sales Officer to speak to the market environment. Ladies and gentlemen, if we look at the market trends and sales trends, as my colleague mentioned, the steel market context hasn’t improved. In Q3, according to the World Steel Association, we’ve seen a greater decline. Production of steel is down by 5.6% globally, whereas in the EU, this decline over Q3 2025 to Q2 2025 is down by 11.5%. If we look at steel production in the first nine months of this year versus the nine months of last year, it’s down across the world by 1.6%. In the EU, it’s down by 3.7%.
The only place we have a clear increase is India, where if we look at the period from January to September of this year, we have more steel being produced in India, whereas in other Asian countries, we can see that there’s less or softer internal support. They’re generally trying to sell on the export markets. On the global markets, we see that the steel exports from China are growing in the first three quarters of this year compared to the similar period of last year. It’s up by some 9%, and that’s some 80 million tons. Here it’s worthwhile noting that steel production in the EU was less than 95 million tons. In the EU, we see more and more steel from countries where Chinese steel has squeezed them out. That means they’re not under the ETS systems.
The decline in the utilization of steel-making production capacity doesn’t improve the prices, as you can see on the market. Prices continue to fall. We have, of course, the flat goods and the long goods, and the rods. This is less dynamic. The expectations of the steel industry are that they want some legal activity to be done by the European Commission to protect the European steel market, having in mind the global glut of steel production. The current functioning mechanism should be replaced in June of next year. As of January, we’ll have the new tax, border tax, which is referred to as CBAM. On the next slide, we see a short summary of prices for cooking coal and coke.
If we look at Q3 prices, we can say the average quarterly price was more or less the same. If we look year to date, for PLD, it’s down by some 27.2%. If we look at semi-soft prices in Q3 versus Q2, they’re up by 12.5%, but the average for the first nine months of the year is lower by 23.2%. Moving on to coal prices, maybe I can give you a short commentary about the market position from January to September of this year. We can say that the global trade of coke was mostly affected by the import quotas introduced by India. This means that Indonesian coke started to access other markets because of the lack of access to the Indian market. According to information, these quotas are enforced in India until the end of the year.
The general directorate responsible for commercial production means, instead of quotas, they want to have anti-dumping tariffs. This would apply to imports from countries where there were basically anti-dumping procedures. Poland is not one of the countries where there was any type of anti-dumping activities done. We’ve seen more seaborne incoming coke, where we didn’t see that present in 2023 in the European Union. If we look at the corresponding period of last year versus this year, Indonesian coke exports have more than doubled from 510 to more than double that figure. In Q3 of this year, Chinese coke prices were up by 3.5%. This is primarily a result of the internal coke prices rising on the internal market there in China. But if we look at the imported coke prices in ARA, it’s down by 7%.
If we look at the ARA ports, if we look year to date in this year, we can say that coke price decline is quite similar. It’s edged downwards by some 27% or 27.8% if we’re looking at Chinese coke prices. What’s very important, we talked about this multiple times. Let me talk about the relationship or the ratio of coke prices to PLV prices. They’re very similar. We can say that they were identical. Then there was an improvement in excess of 1.2 times, but then they fell again. The quarter brought it back down to 1.12 in terms of the relationship of the coke to coal prices. Then if we look at our prices related to market prices, in Q3 of this period, we had prices from April to September of 2025 affecting that price level.
The benchmark price in Q3 of this year is down from what we saw in the previous quarter by 1.5%. The ratio of these prices to the benchmark prices was more or less at the same level as in Q2. We were 97% in Q3 versus 98% in Q2. If we look at the overall coke price with respect to blast furnace coke in the ARA ports, it’s more or less at the same level of 104%. This is coke prices versus the prices of blast furnace coke into ARA ports. We can say that we have regular price decline. If we look at the PSC1 price index or the curve, this is down by some 6% to 21 złoty per ton. Our prices were 83% of that index.
This is something that relates to what we’ve talked about multiple times, what our position is on that market and our parameters of the parameters of our coal differ from the ones that you would generally see for standard steam coal prices. The next slide basically sums up coal sales. We have the coal sales produced in the group. It’s up by 15.5% in Q3 versus Q2. We can see that the steam coal is up by 75%, even though the prices are lower by 4.8%. The steam coal prices are being down by 10%. We had greater revenue from coal sales because we had higher volumes. The increase quarter on quarter is 2.3% in terms of the revenues of sale of coal to external customers.
If we look at the first nine months of the year, the revenue was down in the first nine months of this year versus the first nine months of last year by 15.7%. That’s because of having lower coal prices, which were down by 27%. The coal prices were down by 37%. If you look at sales of coal to internal customers, they’re up by some 27.4%. This is a result of higher coal production, as we said previously. If we look at the sales of coke in Q3, it’s up by 5.6% over Q2, where, in fact, the revenue is down by 3.4%. If we look at the overall coal price, we have, of course, the coal price down by 11.3%.
We had some revenue from hydrocarbons, where we had a higher quantum or volume of sales because we’re utilizing the production capacity of the coking plants. If we look year to date, we can say the sales of coke were down by 9.1% versus last year. This is a result of having lower production. The average coke sales price was down by nearly 26% in the first nine months of this year versus the first nine months of the previous year. That meant that the overall revenue and sales was down by nearly 30% in the first nine months of the year. We have the last slide in my section, which is about the inventories of coal and coke produced in the US group. The coal inventory is down by 14.4% to 1.3 million tons.
There’s not a major change here. But steam coal inventory is down by more than 200,000 tons, which is more than 24%. This is 46% of the total inventory. This includes the technological inventory utilized in the coking plants of the group. If we look at the coke inventory at the end of the quarter, it’s up substantially by 127.7%. Please note that this increase was from the lowest level of inventory we had in history, which was below 100,000-ton watermark. The increase in this inventory is because of loading ships in the ports for overseas sales. It’s roughly 70,000 tons of coke in the ports to be loaded onto ships. That’s it from my side. I’ll go ahead and give the floor back. Thank you very much, Lérez Germin.
We have the results of a number of initiatives that have been undertaken by the JSW Management Board in order to carry out the transformation program of the group, as well as its reorganization. This is applied to the capital expenditures. The CapEx for the group’s needs are down by more than 20%. That’s on a quarter-on-quarter basis, as well as on a basis of comparing the first nine months of this year to the first nine months of last year. We’ve optimized those expenditures. If we look at the coal segment, it’s down by more than 18%. $531 million. This applies above all to investment construction, as well as expendable pits, as well as putting in shields and things like that in the long walls.
Within respect of the investments, we have the decline of 71 million. This is more than 20%. If we compare quarter on quarter, this is roughly 182 million. It’s 17.7%. What’s important here is CapEx in JSW. We have in the coke segment. Quarter on quarter, this is a 44% decline of roughly 40 million złoty. This is a decrease of more than 50%, nine months of this year to nine months of last year. Roughly 150 million. Even though we’ve been radically optimizing our CapEx, I want to highlight and emphasize that we’re not doing any savings on important elements of the plans. The safety of our crews and for the continued operation of our mines and plants, this also applies to the future of the company.
Having in mind the individual mines and plants, we continue to incur CapEx in order to open up new parcels of coal expected by the market. We’re thinking about and focusing on coking coal. If we talk about investments, we’re talking about expanding existing levels in order to enhance safety. If we look at coke, we’re going to continue those operations in terms of building coking battery number four at the Pszczelny coking plant, as well as completing the power plant and the Radlin plants. Thank you very much. I’m going to go ahead and give the floor back to the CEO, Mr. Bogusław Oleksy, at this time. Ladies and gentlemen, what was said at the beginning in terms of sales revenue, we see quarter on quarter a slight increase of 0.8% roughly.
In Q3, our revenue was 290, approximately 5.2 million złoty. If we look at the same period in 2024, in the first nine months of the year of this year versus the first nine months of last year, we can say that the decline in the revenue is much more important because it’s in excess of 20%. Sales have fallen by more than 20%. What were the drivers? Jola Gruszka pretty much discussed these shipping factors. They were market-related factors. If we look at EBITDA net of non-recurring events, we can say that Q3 EBITDA, unfortunately, was lower than the EBITDA in Q2. It was 528.6 million złoty. But year to date, the result after the first nine months of the year is 2.868. Compared to the previous period, where we had more than 5 billion.
If we look at the working capital, including the closed-end investment fund, as you can see, our working capital is negative and has become more negative. At the mid-year point, it was $200 million in the negative. Now, at the end of September, it’s more than $1.4 billion in the negative. The net result, in turn, after the three quarters, we can say that the total loss is $2.8 billion, whereas in Q3 alone, it exceeded $793 million. It was higher. This loss was higher than in Q2 of this year. The next slide presents the change in sales revenue. There are basically two areas. The first one is volume, and the other one is price-based. The green rectangles show you what happened with volume. The volume was rising.
This was the impact exerted by sales volume in the coking coal area. Revenue was up by more than $16 million. Coking coal price change, however, exerted a negative impact, leading to revenue falling by more than $53 million. Again, we had the volume side impact exerted by steam coal. Here we have a positive increase. If we look at the price impact of steam coal, we had a loss. What’s not a loss, but it’s actually a decline in the sales revenue. We have a green rectangle, which again shows the impact of coke sales volume, which is up by more than $42 million. We have the impact exerted by coke price changes. It’s a negative impact of more than $91 million. The market description really does have a major impact on declining sales revenue in the group.
We have expenses by nature across the group. We have seen a decline quarter on quarter in the group. This decline is linked to external services. You can see that on the side of employee benefits are down and materials costs are down. If we look at the first nine months of this year versus the last nine months of last year, we also see a cost decline. What we’re not satisfied by, however, is employee benefits being down. This is a result of the accounting treatment of holiday vacation and allowances for that, as well as for Jubilee Awards. This is not something — this is not the level we’re thinking about in the framework of restructuring the operations. The major cost change drivers, as I presented previously, we have in the first position, lower costs of depreciation and amortization, of nearly $17 million.
Consumption of materials is down by nearly 50 million. Energy consumption, unfortunately, is up as a result of energy prices on the market. As Mr. Rosmus mentioned, we reduced the cost of external services. This is a direction we’d like to follow in the future. We have employee benefits, as I mentioned previously. This is about reclassification of provisions for recreational leave or holiday leave and the Jubilee Award provision. That’s why we have movement here of nearly PLN 73 million, which had an impact on the cost and the cost drivers. We have the mining cash costs that fell in relation to the previous quarter in Q3 over Q2. This decline is 2.2%. When it comes to 9 months, this decline is higher in the first nine months of this year versus the first nine months of last year.
The magnitude of this decline is greater because it’s 6.3% down. It’s down by more than 6%. This is the unit mining cash cost. If we look at the cash conversion costs, quarter on quarter, this cash conversion cost has fallen by more than 23% quarter on quarter. But if we look at the first nine months of this year versus the corresponding period of last year, we have posted an increase of 7.3%. Below we can see the elements of the impact I referred to previously. We see the cost impact as well as the volume impact. This is something we have to grapple with, having in mind, or as long as the market’s going to look the way it looks at present. Here is what I said briefly. You can look at the unit mining cash cost on this graph.
We can see the breakdown in the bridge. The consumption of materials and energy is up by 3.91 złoty, whereas we have lower costs of external services. That means a decline of more than 15 złoty per ton. The next thing is the decline in employee benefits. Then we have a minor item, which are taxes and charges. The other costs by nature and the volume impact on production were negative. If we look at the cash conversion cost, what we’re presenting here, 363 złoty in Q2, 278 złoty in Q3. This was mainly driven by an increase in the consumption of materials, net of coal feedstock. Energy consumption here was down by 2 million. That means that this cost diminished by 2.2 złoty, the cost of external services were down. This should be a constant trend, blisko 5 złoty.
We’ve been able to reduce them by more than 5 złoty. The next thing is employee benefits, dropped by 7.54 złoty per ton. Then we have a decline in products and fees, taxes and charges. It’s pretty high. This is mostly a result of accounting treatment of provisions in terms of issuance rates for CO2. The other items are as follows. We have other costs by nature. It’s pretty minor. We have an increase of admin expenses, it’s up by 25 złoty plus per ton. This result is a result of certain disputes with Rafako. The dispute here is about the installation and the account receivable of JSW Cox vis-à-vis Rafako for the construction of Radlin. The impact volume is quite substantial. As we showed you previously in Q3, this was a big impact versus the previous period.
If we look at the main EBITDA drivers across the group of JSW, these are things that we’ve discussed previously. We can say that the impact of coal sales volume and price is more than 30 million. The impact of coke sales volume and price is an impact of 49 million złoty almost. Other sales has a positive influence of more than 35 million. Then we see the impact of cost by nature. That’s an overall impact of nearly 188 million złoty. We have the impact of impairment of non-financial, non-current assets. So there’s a negative impact of nearly 9 million złoty. The next thing is the impact of the result of other activities. So this is more than 106 million. We have other items, which is more than 200 million złoty.
We have the value of internal construction and the change in the inventories. That’s the main thing. As a result, the EBITDA comes in Q3 minus 520, is in the negative at $528.6 million. After some adjustments are made to exclude one-offs, the end figure for Q3 2025 is negative $485.3 million for EBITDA. These non-recurring adjustments are for acts of fate, unfortunately. A large portion of that amount, of the $43 million, these are basically pure acts of chance that have an exorbitant impact. If we look at the contribution of the various segments to EBITDA, what is the most important here is that the change in the coal segment leads to a negative impact of a little bit more than $193 million. We have the changes in the Coke segment, which also has a negative impact, which is almost $11 million.
We have the changes in the other segment. The negative impact is more than $10 million, it’s around $10.5 million. If we look at the change in EBITDA because of consolidation, we have $97.7 million. Just as we previously mentioned, after the adjustments for the one-offs, the EBITDA in Q3 was in the negative at $485 million. If we look at networking capital, including the closed-end investment fund, as we’ve presented, it consisted of inventory that consists of inventory of $992 million. We have trade and other receivables in excess of $1 billion. We have cash and cash equivalents, so we’re talking about the first nine months plus funds from the closed-end investment fund. We have the funds in the closed-end investment fund, more than $500 million, after making some adjustments and looking at the borrowings and loans and payment of liabilities.
Employee benefits and then having adjusted lease liabilities, so the working capital at the end of the year, or at the end of the period, excuse me, was nearly 2 billion złoty and was a figure in the negative. If we look at the cash flow across the group, what we saw at the end of Q2, we had 677 million złoty at the end of the quarter, quarter three. We had 513 million złoty. The major impact can be seen in the various bars in this bar graph. We had depreciation, we had change in liabilities, trade payables, and then movement in liabilities, loans and borrowings, and the negative impact, so the pre-tax impact. All those factors are taken into consideration. This is where I will wrap up the financial portion of the presentation.
In terms of our business restructuring assumptions, in many cases, this, of course, touches upon the financial side of things. I’d like to say a few words to you about the business restructuring program, which is being prepared and is being executed at the same time because we weren’t really able to wait to start the performance of this program. We started performance immediately after the core assumptions were embraced. The major areas identified in our reorganization plan. We have the financial security of the JSW Group, and this is a core thing that we’re addressing. Basically, reduction of operating expenses and restoring our financial liquidity in making us seen as a good debtor. The next thing is restructuring the current debt. Here work is in progress. This work entails our relationships with financial institutions.
In just a couple of moments, I’ll say a few more words about that subject. We’re also working on securing funding sources in order to be able to execute the restructuring plan because the money in the closed-end investment fund basically is dwindling, is coming to an end. So we need to have additional sources of funding. The second area is linked to the cost side of financing. We want to reduce on a sustainable basis our operating expenses, looking at our market analysis about Coke and Coke, what’s happening on the local market as well as the global market. We need to find a different cost model. We can’t continue operations with the current cost structure. This is something that’s very important, especially if we talk about labor costs, which account for more than 50% of our budget.
The other thing that was mentioned by Mr. Rosmus, and this is a matter of our investments, our capital expenditures, we want to prioritize them. We want to make sure that we’re allocating funds correctly in order to be able to achieve the best possible outcomes. That’s why our people are working on that subject intensively. We’re already in the process of delivering this, executing this program, but we’ll be ready with respect in the near future, with respect to next year and subsequent years. Another thing is the sale or liquidation of assets. We’re not talking about assets in the colloquial sense in terms of certain facilities or things like that. We’re talking about large-scale facilities held by the group where we would like to monetize them in the near future.
In terms of the structure of the group, we have a review of the processes and implementation of measures. Above all, we want to optimize the group structure. What do we understand about that? We want to diminish the size of the group. All of those companies not directly related to core business should be sold, divested. We also want to optimize the structure. We want to merge companies to achieve some of the synergies that exist within the group. This is a big area. Of course, we attach great hopes to that because our group consists of multiple elements. We can’t say that it’s an optimal structure at present. As we restructure the group, we have to change the oversight. It has to be strengthened.
It has to be more efficient in order to manage our capital group, our group, and not just exercise formal oversight. What awaits us? We have four major areas. We have to devise a support plan from the State Treasury. We need to work out an agreement with the trade unions in terms of reducing costs and the work organization. This is the group itself. We need to have the business restructuring plan for the overall group. We also have to work out some financial terms with financial institutions because we have loans, a syndicate loan granted by several banks. The conditions of this financing need to be adapted to the assumptions embraced in our restructuring plan. The parties I’ve mentioned are very important.
The management is spending a lot of time at present with the State Treasury and financial institutions and with the trade unions in order to be able to achieve the intended objectives. When it comes to the State Treasury, this is not the most important element. We’re working with the social insurance institution to obtain support, and we want to defer and make installment payments for ZUS contributions. That’s one area. The second area is working out possible forms of support by the State Treasury. Here we’re looking at a large number of solutions available in this period, in this scope. What we want to do is adapt that to our solutions in terms of the magnitude of that support. This is something that we would like to do in the short period. That’s something we don’t conceal.
There is the inclusion of JSW under the Act on the functioning of the hardcore mining industry. This law has not yet been enacted. But we’re working quite intensively on this subject over the last several months because originally JSW was not a target beneficiary of that law. This law would enable the company to cover the costs of minor recreational leaves or holidays, as well as several cash severance pay positions in the law. We hope that this law, by the end of the year, will be enacted and will take force, and that we’ll be able to access that law. The legislative period is not something that’s beneficial to us because it really depends when finally the law takes force, and then we can make a precise calculation of cash flow in the next year.
We have more than 3,000 people scheduled for vacation or basically for these leaves, and then more than 700 people are severed immediately. We’re going to try to increase the number of one-off cash severance payments because the assumptions we’ve made about restructuring that will be able to potentially have a higher number of people subject to these one-off cash severance payments. The trade unions are presented here. The Social Party is the second party, but the management team is working above all on reaching an agreement with the Social Party, with the trade unions in the recent period. We advised you through our current reports that we’ve managed to sign an agreement about guarantees of employment. This was abolished with respect to several categories of employees. Here we’re talking about administrative staff.
Let me remind you that these employment guarantees were 10 years in length and were absolute, and so that somehow capped our ability to do some or our flexibility, limited our flexibility in terms of restructuring. We’re still talking about limiting the St. Barbara payments and of limiting the payments of bonuses, the so-called 14th salary, and also the calculation of sick leave. What we see in the company, it’s more than 20% higher than what’s decided or determined by the labor code. These negotiations are very difficult because our expectations to reduce labor costs are very high. The bar is very high for that reduction of employment benefit costs. If we look at the group itself, we’re working on two mining centers. We would like to have two centers for mining. This is not something that’s well known in the mining industry in Poland.
We’d like to have two structures which would give us the ability to allocate employees more strategically and utilize the assets. This is something that would be desirable, and we’re convinced that this is something that will produce the outcomes we have laid out at the beginning. The next item is about our operating expenses. My colleague, Mr. Rosmus, is working on that, and his team is working on OPEX, on CAPEX. These are quite important issues, as you could see in our cost breakdown. If we look at external services and our expenditures for staff, we’re also important. This is something that will determine the future of these mines. Without these expenditures, it’s hard to imagine that we would be capable of maintaining our run rate and having a position in place for our customers. Those are those three issues.
We have financing institutions. I already mentioned that work is in progress. This is not straightforward. Each one of these areas is difficult with the accession of the group, where we have a direct impact in terms of what we’re proposing and will enforce what we’ve stated as a matter of our targets. In terms of the State Treasury, trade unions, and financial institutions, those are difficult discussions, but we continue to run them on an unwavering basis, and we’re convinced that we’re going to be able to achieve our intended outcomes. In terms of restructuring, this is something — well, there are some minor things that I don’t want to discuss. It’s a matter of our basic activities: renegotiating contracts, reducing energy consumption, reducing inventories, shortening the cash conversion period, getting rid of or divesting of extraneous assets, reducing the number of FTEs.
This was something that was blocked by the employment guarantees. This has now been abolished with respect to admin employees, people who have reached retirement age, and this will support our operating activities in the mines. These are things that have been done. We have certain soft elements that had to be scaled back, unfortunately, like training. There are certain things that are required by law, then we continue those, but we also have to scale back on those types of expenditures. We’ve refrained from paying out bonuses linked to the results. We had a pilot, and we notified you of that. This pilot is no longer up and running, so we’re not incurring costs there. I didn’t mention this because I think it’s pretty straightforward. We’re looking at all of these areas.
We’re looking at all of the processes because we have to find savings in these processes. The procurement process is also an area that we’re going to be optimizing and restructuring the organization. We have these mining centers, which will testify to that. These are things that we’re doing the optimization on an ongoing basis. Managing the cash centers, these are things that are happening. We’re not articulating that at full throttle because this is basically our daily bread. What goes beyond that is what we’ve presented today. This is where I’d like to wrap up our presentation. Thank you very much for your attention. Now, I think we’ll move on to some questions that have appeared. I would ask for some questions to start the Q&A session now.
Ladies and gentlemen, I’ll read the first question that the company has received: the voluntary redundancy program. When will this take place in the company? As I mentioned, work is underway with respect to the draft legislation on the functioning of the hardcore mining industry. If this work is completed, then we will immediately proceed to implementing our voluntary redundancy program. There’s a specific number that’s been defined. We can say that we will probably be able to increase that number based on what’s happening with that legislative process. We’re working jointly with the ZUS Social Insurance Institution because ZUS will have to process those people in terms of the vacation leave or holiday leave and make the calculations as well as their retirement or redundancy. We’re working with them hand in hand.
A lot of the work has been done because ZUS will have to do a lot more as a result of this process. This is something that got started in November of this year. The next question: what number of employees does the management board expect to reduce, and what are the estimated annual cost savings? Once again, I have to refer to the fact that we don’t know what the final shape of this law will be. But amongst the employees, we’ve distributed a questionnaire or a survey, which is to check their perception of utilizing these two instruments in the law. To our surprise, even though the number of people were entitled, which consists of 3,100 employees, that number was defined by our HR team. We have more than 6,000 people who have come forward with their request to participate.
We believe that more people would like to take advantage of this process. If we look at one-off cash severance payments, we can say that nearly 700 people responded to that. This would basically fulfill the figure defined in the draft legislation. This does not surprise us. We’re working on to be able to increase or drive up that number of people because after the guarantees, working guarantees, labor guarantees being suspended, then it’s clear that the number of voluntary redundancies on a non-recurring basis with cash severance will be higher. Would this be something that would affect current operations, reducing production? Will there be any negative impacts as a result? The question is very interesting because we’re working on this subject with my colleague in the management team. What is the, with Mr.
Rosmus, what is the optimal number of people? How many people do we need? Because this is where we’re doing the actual mining. At present, we haven’t defined a specific number. But having in mind the average age and skills and qualifications that employees have, we need to have a precise definition. We don’t want to have a situation in which employees will take vacation or holiday leave and we won’t have the right level of output. The work is underway here. We’re trying to standardize that across the production-related units and departments. This is underway. I don’t think this will have a major impact on our production capacities. If we look at these holiday leaves, this is spread over years. This is not something that would happen all at once. We would prepare to replace those persons who would leave.
The next question: what is the estimated financial effect of making changes to the 10-year employment guarantee? How many employees might, let’s say, walk away? As I mentioned, the employment guarantees that have been executed means that the admin staff, with the exception of people working in our wash plants, all of those people are potentially ones subject to restructuring. So we assume that the number of these employees is around 1,000 people. But until we complete the work on the standardization of our departments, until we’ve completed the preparations on these two mining centers, it would be very difficult to give you a precise response. However, in the near future, the management board office will be restructured as well as the production support department. We’ve identified a large excess number of staff, and so this is an area that will be profoundly restructured.
I don’t want to speak to the costs themselves yet because, as I mentioned, we haven’t fully defined this area yet. Of course, these costs will be calculated, and I think it’s going to be material because when we say 10% of our employees might leave the company, well, that 10% would have an impact on the amount of our costs. How many people still have employment guarantees and how many people do not have employment guarantees? At present, we have roughly 20,000 employees in GSW. So almost 4,000 people do not have employment guarantees. The other people have employment guarantees. These are people in our core business. These are the people who are supposed to extract the coal. We’re not including people who are destabilizing the workplace because we do see cases like that, which are not just individual cases.
These people are affecting production output, and if somebody is making a review of that person’s, let’s say, involvement, and that person might come to the conclusion that that person poses a risk to our stable production, and then we get rid of those people. We won’t be afraid of doing that, getting rid of people like that, because there’s no place for us to retain employees who are pretending to work. Our remuneration system is somehow petrifying or shapable toward the social side, which will also bring our heads to the Social Party, to the employees, because they’ve actually pointed out which people should be reviewed and examined. This is to ensure that only those people are paid who are contributing to the company and its value. Will the bonus for St. Barbara’s Festival be paid to employees?
This question is a difficult question because we are checking and tracking our cash flow and having in mind that we have negative cash flow. The company has had negative cash flow for a while. This could be a fundamental problem had we not had the closed-end investment fund. We haven’t made the decision yet, but the decision to pay out this bonus is subject to a high level of risk. Even though PGG and other miners intend to pay out these St. Barbara Festival cash bonuses, we see this as subject to high risk, and we haven’t made that decision to do so yet. When does the company effectively intend to utilize funds from the State Treasury for restructuring? How many employees might be subject to this plan?
As I’ve mentioned, it depends on the date on which this law is enacted, the law that I’ve been talking about, this legislation. So as soon as it goes into force, then funds have to be allocated for that purpose because the law itself will not enable us to put these persons into these individual leave programs. So after that law takes force, it’s our plan. We’re planning that jointly with the Social Insurance Institution. We assume that this will take place starting from the second month of next year. When can we expect there to be a new agreement struck with the trade unions reducing staff salaries by a double-digit figure in the teens? I don’t know, because as I said previously, this work is underway. And I would emphasize here, this work is very difficult.
Here, my two colleagues from the management team and I are participating in these talks. I continue to believe in the wisdom of our staff, and I believe that we will strike an arrangement, an agreement. But these negotiations are quite demanding. Thank you very much. Next question. The company is reporting a very low monthly sales of external sales on coking coal. Is this because of a softer market, lower cheaper coal coming into Europe? Or maybe there’s been a loss of confidence amongst GSW’s partners following the last three months of extraordinary events? Well, the European market is clearly in a difficult position. EU steel production is falling year on year. Of course, that’s having an impact on the products that we generate or produce. So coking coal and coke in recent months.
ArcelorMittal made the decision to turn off its blast furnace in Dobrowie Górnicze temporarily. This is something that’s having a local impact. We’ve seen some events in the mines which affected the availability of semi-soft coal. Our partners had to react. They had to buy semi-soft coal from others. Despite that, as we indicated during the presentation, we’ve been able to sell more coal in Q3 versus Q2. We’ve been able to increase that. If we look at the period from January to September 2025 compared to that same period in 2024, the volume of sales is up by 17%. Thank you very much. Next question. Is a run rate in 2026 of 13.5 million tons, is that your minimum plan, or is that the best-case scenario, an optimistic plan?
As we prepared the foundation for the 2026 economic and financial plan, we embraced basically a run rate. This is a matter of having in mind where we are in terms of setting up or opening up areas to produce coal. Then we have how advanced our work is on preparing the galleries, capital expenditures, what sort of natural resource base we’ll have, having in mind mining leave as well as retirement attrition, generally speaking. I think it would be best to call this the optimum plan. Next question. Having in mind your production in October, does the plan of 13.5 million seem to be a conservative plan? That’s true. We had a record-breaking level of production of 1.4 million tons. But to achieve that plan, there are a number of elements that were mustered in order to do that.
We can’t build plans based on what happens in a single month because there are a number of other factors we have to incorporate. Geological mining difficulties have to be factored in. That’s why we can’t rely only on a single month. The 13.5 million ton production plan is taken into consideration some possible conservative estimates. You might have planned possible but not planned deterioration in geology and unforeseen incidents. To what extent do you have reserves or provisions? It’s very difficult to assume for extraordinary events. We have to anticipate certain events or circumstances. We have to organize our operations in such a way to think about things that have happened in the past. We always have a certain margin of error included, but we’re focusing on those efforts that would prevent those events from happening. Thank you very much.
Next question. If we look at the long-term outlook, what are the strategic major avenues for the company’s restructuring or reorganization? I’ll respond to this question. At present, we’re focusing not on strategic efforts, but on our current operations in stabilizing things and ensuring that our financial liquidity is secured. This is key to talk about the future. So we have to have a stable foundation. This is what we’re working on as number one. Number two, as I said previously, this is a cost-side thing. We have to be much more flexible on a cost basis. Because without having the flexibility then we might have big losses and without having funds set aside for a stabilization fund, we wouldn’t be able to operate on this marketplace. What’s key here and what’s more strategic here is having an effective or efficient group, as I mentioned, strategically.
We want to restructure the group very strongly. We want to reduce the number of companies. We need to have business support companies so our operations will be swift. Some people might think these are drastic decisions, but we have to go through a process to convert ourselves quickly into a lean organization. It’s a necessity. Thank you very much. CapEx, do you plan for 2026? Quantum, do you want to reduce the annual CapEx in upcoming years? Ladies and gentlemen, at present, we’re working on defining our annual financial budget. This means, of course, within the context of the restructuring plan. The decision has been made to finish up investments that were commenced. We’re thinking about new levels or new areas and fields of mining. Of course, we do plan to scale back our CapEx in 2026 as well as the subsequent years.
Next question. If we look at merging mines, what sort of savings does merging mines deliver? At present, it would be premature to talk about savings or specific savings in terms of stating a given figure. If we look at other mining enterprises, this is something that has to be taken into account. We’re working on a model that will ultimately be followed. So we have a separate southern mine section as well as northern mine section. We’re looking at the benefits. We want to prepare the organization to function for many years to come in terms of our resilience to changes in terms of technology operation, utilizing headcount and utilizing the mine pits and the mine deposits on a rational basis and reasonably. We want to coordinate our efforts and factor in, of course, natural hazards.
We want to manage our assets, our equipment, reducing admin functions. These are some of the slogans or topics that we have to have in mind as we do this work. Thank you very much. What are your planned cost savings in 2026 versus 2025? By how much does the management team want to reduce the company’s operating expenses? I can say clearly that we plan to achieve major cost savings, że te prace cały czas trwają. Przypomnę, że założenia do planu restrukturyzacji zostały przedstawione trzy tygodnie temu. We started that process and we’re working. We’re in dialogue with the owner, with financial institutions and other stakeholders. This work is underway the entire time. After we complete this planning process, then we’ll know the details. Generally speaking, when I say significant savings, this is not something that’s meaningless.
These are expectations that we have to change our cost mix substantially or considerably. Thank you very much. What is the outcome of the work done by the advisor AT Kearney, where JSW terminated that agreement after working together for a year? How much money was spent on cooperation with that company, and how much do you think it would be able to save thanks to the ideas they’ve generated? If we think about the work done by AT Kearney, we published a current report, but since we had the termination of that agreement with AT Kearney’s advisor and we’re revising or looking at the work on the strategic transformation and so possible continuation and initiatives with the greatest potential, and perhaps we’ll have to revisit certain assumptions. This is all a matter of doing the restructuring with our in-house resources.
I don’t want to talk about the details because of some contractual relationships as well as the commercial secrecy under the agreement that I have to uphold. Thank you very much. Next question. Are you considering any type of capital support from external entities at all at present? Ladies and gentlemen, financial operations and the business operations have to take into consideration a variety of scenarios. We have to be prepared for a variety of scenarios. That’s why we’re working to have the windfall tax being reimbursed or refunded. The company, as we analyze our position, is looking at capital support from other sources. This analysis has to be a market-based approach in terms of what about the funds that could be achieved from the market. We’re looking at the ability to obtain funds support in terms of the European approach.
This is something that limits our capability quite strongly. We’re penetrating the markets in order to secure additional funding from the markets. That’s why we’re determined to change our costs, to restructure things because potential investors or financing entities want to see this company that would be able to generate a return in terms of the business that would be financed utilizing their funds. This is something we’re working on. We would not conceal the fact that work is underway on the subject. Next question. Any other directions of restructuring, reorganization? I think we’re really drilling down on the postulates that have already been enumerated. We’re involved in the remedial process that’s quite profound, working with our majority shareholder, and we’re working with the social partner. These are those avenues which have informed our restructuring efforts. We talk about cost restructuring.
We’re doing some remedial work, organizational work across the group. So in terms of the owner, we’re thinking about those expectations to optimize business processes and cost structures. Banks also anticipate and are asking about the return profile, what sort of profits we’re generating within the business. All of this is underway. We should mention the final outcome of the final outcome will depend on all of these actions and on agreeing upon these actions. We’ll depend on what we agree upon. That’s why we’re determined and we’re talking about making achievements across all of these areas in terms of our intended objectives or outcomes. So if we don’t strike an arrangement or an agreement, then we’re going to have to look for other solutions and other avenues of restructuring. Nonetheless, as I’ve mentioned, I think it’s possible to achieve a consensus here. Thank you very much.
After January 1st, where will JSW source cash in order to fill in the gaps in the revenue? Have you already utilized all of the funds that you had in the closed-end investment fund? If we talk about the funds in that closed-end fund, we still have funds there, some money there. We have some plans in December to utilize that money from the fund, the closed-end investment fund. So we’ll still have around $100 million unused in that fund. This is a result of the security or collateral given to the credit structure. Everything that we’re doing, we have to ensure that funds will be generated through current operations. Since we can’t determine or force the market to do something, that’s why we have such a strong determination. We want to reduce the cost to make sure that our operations would generate a profit.
But something else I’ve also mentioned, we are working on identifying other sources. We have support from the owner. I assume and expect that the support will materialize at the right time, and we won’t have any difficulties at the beginning of the year with liquidity. Thank you very much. That was the final question. In that case, if we’ve completed the Q&A session and the presentation, I would like to thank you very cordially for your attendance. We are in a difficult and challenging situation. It is my hope that you can see that we are endeavoring to utilize all of the opportunities available for the company to be able to operate in an undisturbed fashion. We’re doing a lot of work across the board. We’re bringing order into the company, cleaning things up.
After this reorganization, we want the company to be a good, solid business partner for our customers and for this company to be a safe and certain place of employment for employees. This is our joint objective, and this is a conviction that we have as we enter into and perform our various activities. Thank you very much for your attention.
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