Jastrzebska Spólka Weglowa S.A. (JSW) Earnings Call Transcript & Summary

Ladies and gentlemen, I would like to welcome you very cordially to the results conference where my 2 colleagues will join me from the Management Board. We'll talk about the results of the Group for Q3 and the first 9 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, position of the company. And 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. And so 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. And this is a strong reason for us to commence, we started 2 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 festival, it's not something we can celebrate the way we have usually done that in the past because the position of the company is challenging. And despite these difficulties, I would like to thank our employees for the accomplishments and achievements they've made up until now. So 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 where we kicked off the process of restructuring, reorganization. So personally, for 2 months in essence, I've been participating in a very clear fashion. And so we have a large number of challenges linked to the consultations, negotiations with the social party, with financial institutions, with the owner. And the work we're doing is in progress. These meetings are being held on a regular basis. And for the entire time, we're looking for the best possible solution for the company to be able to navigate the upcoming period with -- as fast as possible with an undisturbed fashion. So 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. And so we're convinced that what we've prepared, these efforts that we've prepared will be conducted successfully. So if you 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. And perhaps I'll begin with the main bullet points about our Group. So if you look at coal production during the most recent quarter, it was in excess of 3.3 million tons. So this is a slight decline compared to the previous quarter. My colleague will drill down in details in just a moment. If we look at coke production, we see that it's up by more than 20%. And so this is something that we should embrace with satisfaction. The number of active longwalls at present, so we have 22.2 active longwalls, which is an increase of essentially 2 longwalls. The mining cash cost in term has -- 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 coking coal and coke, unfortunately, this is what I mentioned at the beginning, that we have a downward-moving market. And so my colleague, Jolanta Gruszka, will talk about in just a few moments. In both cases or in both products, we see price declines. The EBITDA posted has a bigger negative figure in Q3. It's bigger than in Q2, which is also negative. And as a result, the net result, well, the loss basically increased in Q3 to PLN 793.7 million. So 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 9 months of this year versus the first 9 months of last year, we're up by 5.1%. So we have more coking coal and less steam coal. So 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 goal, and we compare Q-on-Q, it's very stable. So we have more than 17,500 meters. And if we do a comparison of the first 9 months of this year versus last year, there's a slight decline, but this is a matter of stabilization. And so if we look at coke 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 9 months of the year. And so 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. And so in Q3, according to the World Steel Association, we've seen a greater decline. So 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 9 months of this year versus the 9 months of last year, it's down across the world by 1.6% and the EU is down by 3.7%. So the only place we have a clear increase is India, where if we look at the period from January to September of this year, and so we have more steel being produced in India. Whereas in other Asian countries, we can see that there's less or softer internal support. And so 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 3 quarters of this year compared to the similar period of last year. And so it's up by some 9% and that's some 80 million tons. And 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 the Chinese steel has squeezed them out. And so that means they're not under the ETS systems. And so the decline in utilization of steelmaking production capacity doesn't improve the prices. As you can see on the market, prices continue to fall. So we have, of course, the flat goods and the long goods and so the rods. And so this is less dynamic. And so the expectations of the steel industry is 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. And so 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 coking coal and coke. So if you look at Q3 prices, we could say the average quarterly price was more or less the same. If we look year-to-date, for PLV, they're 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 9 months of the year is lower by 23.2%. Moving on to coke 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 globally trade of coke was mostly affected by the import quotas introduced by India. And so this means that Indonesian coke started to access other markets because of the lack of access to the Indian market. And so according to information, these quotas are enforced in India until the end of the year. And so the general director responsible for the commercial production means, instead of quotas, they want to have antidumping tariffs. And so this would apply to coke imports from countries where there was basically antidumping procedures. And Poland is not one of the countries where there was any type of antidumping activities done. And so we've seen more seaborne incoming coke, where we didn't see that present in 2023 in the European Union. And so if you look at the corresponding period of last year versus this year, so 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%. And 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. So if you look year-to-date in this year, we can say that coke prices decline is quite similar. So it's edged downwards by some 27% or 27.8% if looking at Chinese coke prices. And so 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. And so we could say that they were identical, but then there was an improvement in excess of 1.2x, but then they fell again. And so the quarter brought it back down to 1.12 in terms of the relationship of the coal to coal prices. And then if we look at our prices related to market prices, so in Q3 of this period, we had prices from April to September of 2025 affecting that price level. And so we can say that the benchmark price in Q3 of this year is down from what we saw in the previous quarter by 1.5%. And so the ratio of these prices to the benchmark prices was more or less at the same levels in Q2. So we were 97% in Q3 versus 98% in Q2. And so 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 price versus the price of blast furnace coke into ARA ports. And so we can say that we have regular price decline if we look at the PSC 1 (sic) [ PSCMI 1 ] price index or the curve. And so this is down by some 6% to [indiscernible] per ton. And so our prices were 83% of that index, and this is something that relates to what we've talked about multiple times, what our position is on that market and our parameters. 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. And so we have the coal sales produced in the Group, and so it's up by 15.5% in Q3 versus Q2. And then we could see that the coal -- the steam coal is up by 75%, even though the prices are lower by 4.8% and the steam coal prices are being down by 10%. So we had greater revenue from coal sales because we had higher volumes. And so the increase quarter-on-quarter is 2.3% in terms of the revenues on sale of coal to external customers. So if we look at the first 9 months of the year, so the revenue was down in the first 9 months of this year versus the first 9 months of last year by 15.7%. And that's because of having lower coking coal prices, which are down by 27%, and then the coal prices were down by 37%. And so then if you look at sales of coal to internal customers, so they're up by some 27.4%. And this is a result of higher coke production, as we said previously. And then 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 coke price, we have, of course, the coke price down by 11.3%. And then we had some revenue from hydrocarbons, where we had a higher quantum or volume of sales because we're utilizing the production capacity at the coking plants. If you look year-to-date, we can say the sales of coke were down by 9.1% versus last year, and this is a result of having lower production. The average coke sales price was down by nearly 26% in the first 9 months of this year versus the first 9 months of the previous year. And that meant that the overall revenue and sales was down by nearly 30% in the first 9 months of the year. And then we have the last slide in my section, which is about the inventories of coal and coke produced in the U.S. group. And so the coal inventory is down by 14.4% to 1.3 million tons. And so there's not a major change here. But steam coal leave a trace down by more than 200,000 tons, which is more than 24%. And so this is 46% of the total inventory, and 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. Increase in this inventory is because of loading ships for overseas sales. And so it's 70,000 tons of coke in the ports to be loaded on to ships. So that's it from my side. So I'll go ahead and give the floor back.

So thank you very much, gentlemen. And so 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. So this is applied to the capital expenditures. And so 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 9 months of this year to the first 9 months of last year. So we've optimized those expenditures. And so if we look at the coal segment, it's down by more than 18%, so PLN 531 million. And this applies above all to investment construction as well as [ expensable ] pits as well as putting in shields and things like that in the longwalls. And so in respect of the investments, so we have the decline of [ PLN 671 million ]. So this is more than 20%. And if we compare quarter-on-quarter, this is roughly PLN 182 million, so it's [ 17.7%. ] What's important here is CapEx in JSW, well, we have in the coke segment, it's quarter-on-quarter, this is 44% decline of roughly PLN 40 million. And this is 50% 9 months of this year to [indiscernible] and so roughly PLN 150 million. So 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 plant, so 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. So we're thinking about focusing on coking coal. If we talk about investments, we're talking about expanding existing levels in order to enhance safety. And if we look at coke, we're going to continue those operations in terms of building coking battery #4 at the Trisan coking plant, as well as completing the power plant in the Radlin plant. So thank you very much. I'm going to go ahead and give the floor back to the CEO, Mr. Boguslaw Oleksy, at this time.

Okay. I'm in the right spot now. Ladies and gentlemen, what we 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 PLN [ 2.295 ] billion . If we look at the same period in 2024 in the first 9 months of the year this year versus the first 9 months of last year, we can say the decline in the revenue is much more important because it's in excess of 20% -- or sales have fallen by more than 20%. What were the drivers? So Jola Gruszka pretty much discussed these contributing factors. They were market related. If we look at EBITDA net of nonrecurring events, we can say that Q3 EBITDA, unfortunately, was lower than the EBITDA in Q2. So it was PLN 528.6 million. But year-to-date, the results after the first [indiscernible] is 2.8, compared to the previous period where we had more than PLN 5 billion. And so if we look at the net working capital, including the closed-end investment fund, as you can see, our net working capital is negative and has become more negative. So at the midyear point, it was PLN 200 million in the negative. And now at the end of September, it's more than PLN 1.4 billion in the negative. The net result in turn after the 3 quarters, we can say that the total loss is PLN 2.8 billion, whereas in Q3 alone, it exceeded PLN 793 million. And it was higher -- this loss was higher than in Q2 of this year. The next slide presents the change in sales revenue. And so there are basically 2 areas. One is volume and the other one is price-based. So the rectangles show you what happened with volume, that volume was rising. So this was the impact exerted by sales volume in the coking coal area. And so revenue was up by more than PLN 16 million. So coking coal price change, however, exerted impact, leading to revenue falling by more than PLN 53 million. Again, we had the volume side impact exerted by steam coal. And so here we have a positive increase. If we look at the price impact of steam coal, we had a loss -- well, it's not a loss, but it's actually a decline in the sales revenue. Then we have a green rectangle, which again shows the impact of coke sales volume, which is up by more than PLN 42 million. Then we have the impact exerted by coke price changes. So it's a negative impact of more than PLN 91 million. So the market description really does have a major impact on declining sales revenue in the Group. And then we have expenses by nature across the Group. So we have seen a decline quarter-on-quarter. This decline is linked to external services being down. You can see that on the side. Employee benefits are down and materials costs are down. If we look at the first 9 months of this year versus the last 9 months of last year, we also climbed. 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. So this is not something -- this is not the level we're thinking about in the framework of restructuring up. So the major cost change, as I presented, so we have lower cost of depreciation of nearly PLN 17 million. Consumption is down by nearly PLN 50 million. Energy consumption, unfortunately, is up as a result of energy prices on the market. We've also reduced, as Mr. Rozmus mentioned, we reduced the cost of external services. And this is a direction we'd like to follow in the future. Then we have employee benefits. As I mentioned previously, this is about reclassification of provisions for recreational leaves, holiday leaves and the jubilee award provision. And that's why we have a movement here of nearly PLN 73 million, which had an impact on the cost and the cost drivers. Then we have the mining cash costs. So it fell in Q3 and Q2, this decline is, percent, in the first 9 months of this year versus the first 9 months of last year, the magnitude of this decline is greater because it's 6.3% down. It's down by more than 6%. And so this is the unit mining cash cost. If we look at the cash conversion costs quarter-on-quarter, this cash conversion cost has fallen 23% quarter-on-quarter in first 9 months this year versus the corresponding period of last year, we have posted an increase of 7.3%. Below, we could see the impact I referred to previously. We see the cost impact as well as the volume impact. So this is something we have to grapple with having in mind or as long as the market is 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. So we can see the breakdown in the bridge. The consumption of materials and energy is up by PLN 3.91, whereas we have lower costs of external services. So that means a decline of more than PLN 15 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 is a decline from PLN 363 in Q2 to PLN 278 in Q3. And this is mainly driven by an increase in the consumption of materials net of coal feedstock. Energy consumption here was down by nearly PLN 2 million, and that means that this cost diminished by PLN 2.2. The cost of external services were down. And this should be a constant trend. And so we've been able to reduce by more than PLN 5. The next thing is employee benefits, which is down by PLN 7.54 per ton. And then we have a decline, products and fees, taxes and charges, so 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, and we have an increase of admin expenses. So it's up by PLN 25 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 KOKS vis-a-vis Rafako, and for the construction of Radlin. The impact on 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. And we can say that the impact of coal sales volume and price is more than PLN 30 million. The impact of coke sales volume and price, this is an impact of PLN 49 million almost. Other sales has a positive influence of more than PLN 35 million. Then we see the impact of cost by nature. That's an overall impact of nearly PLN 198 million. And then we have the impact of impairment of nonfinancial, noncurrent assets. So there is a negative impact of nearly PLN 9 million. The next thing is the impact of the result of other activities. So this is more than PLN 106 million. Then we have other items, which is more than PLN 200 million. And then we have the value of internal construction and the change in the inventories. So that's the main thing. As a result, the EBITDA comes in of Q3 is in the negative at PLN 528.6 million. After some adjustments are made to exclude one-offs, the end figure for Q3 2025 is negative PLN 485.3 million for EBITDA. These nonrecurring adjustments are for acts of [ fate ], unfortunately, and a large portion of that amount, of the PLN 43 million, these are basically pure act of chance that have an [ exotic ] 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 PLN 193 million. Then we have the changes in the coke segment, which also has a negative impact, which is almost PLN 11 million. And then we have the changes in the other segment. The negative impact is more than 10 -- it's around PLN 10.5 million. And then if we look at the change in EBITDA because of consolidation, we have PLN 97.7 million. And just as we previously mentioned, after the adjustments for the one-offs, the EBITDA in Q3 was in the negative at PLN 85 million. Then if we look at net working capital, including the closed-end investment fund, as we did. So it consists of inventory of PLN 992 million. We have trade and other receivables in excess of PLN 1 billion. Then we have cash and cash equivalents. So we're talking about the first 9 months. And then we have the funds in the closed-end investment fund, more than PLN 500 million, after making some adjustments [ and savings ] and loans, liabilities, employee benefits and having adjusted lease liabilities. So at the end of the year -- or at the end of the period, excuse me, was nearly PLN 2 billion and was a figure in the negative. Then if you look at the cash flow across the Group, what we saw at the end of the Q2, we had PLN 677 million. At the end of the quarter 3, we had PLN 513 million. The major impact can be seen in the various bars in this bar graph. So we had [indiscernible] we had change in liabilities, we had trade payables, receivables and then movement in liabilities, loans and borrowings, and the negative impact, so the pretax impact. All those factors are taken into consideration. This is where I will wrap up the financial portion of the presentation. But in terms of our business restructuring assumptions, in many cases, this, of course, touches upon the financial side of things. And now I would 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. And so we start to perform it immediately after the core assumptions were embraced. The major areas identified in our reorganization plan, so we have the financial security of the JSW Group, and this is a core thing that we're addressing. And so basically reduction of operating expenses and our financial liquidity in making us say a good, let's say, debtor. The next thing is restructuring the current debt. Here, work is in progress. This work entails our relationships with financial institutions. And 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 cost side of financing. So we want to reduce, on a sustainable basis, our operating expenses. Looking at our market analysis about coking coal and coke, what's happening on the local market as well as the global market, we need to find a different cost model, so -- and continue operations with the current cost structure. And so this is something that's very important, especially if we talk about employment costs or labor costs, which is more than 50% of our budget. The other thing that was mentioned by Mr. Rozmus, this is a matter of our investments in capital expenditures. We want to prioritize them. We want to make sure that we're allocating funds correctly in order to be the best possible outcomes. And that's why our people are working on that subject intensively such that we'll be prepared. But 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 [indiscernible] in terms of certain facilities or things like that, but 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, so we have a review of the processes and the implementation of measures. Above all, we want to optimize the Group structure. So what do we understand by 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. So we want to merge companies to achieve some of the synergies that exist within the Group. So 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. And so 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 4 major areas. So 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 -- or the work organization versus the Group itself. So we need to have the business restructuring plan for the overall Group. And we also have to work out some financial terms with financial institutions because we have loans, a syndicate loan granted by several banks. And so the conditions of this financing need to be adept to the assumptions embraced in our restructuring plan. So the parties I've mentioned are very important. And so 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, we're working -- 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 variety of a large number of solutions available in this period in the scope. What we want to do is adapt that to our solutions in terms of the magnitude of that support. And this is something that we would like to do in the short period. That's something we don't conceal. And there is the inclusion of JSW under the act on the functioning of the hard coal 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. And this law would enable the company to cover the costs of miner recreational leaves, holidays as well as several cash severance pay [ provisions ] in the law. And 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. So 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. So we have more than 3,000 people scheduled for vacation or basically for these leaves, and then most of the people [indiscernible]. And so we're going to try to increase the number of one-off cash severance payments because the assumptions we've made about restructuring suggest that we'll be able to have a higher number of people subject to these one-off cash severance payments. So 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. And we advised you through our current reports that we've managed to sign an agreement about guarantees of employment. And so this was abolished with respect to several categories of employees. And 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 payment 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, that 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 2 mining centers. We would like to have 2 centers for mining. This is not something that's well known in the mining industry in Poland. So we'd like to have 2 structures, which would give us the ability to allocate employees more strategically and utilize the assets, that 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. Then the next items is about our operating expenses. And my colleague, Mr. Rozmus, is working on that. And so his team is working on OpEx, on CapEx. These are quite important issues. As you can see in our cost breakdown, if we looked at external services and our expenditures for staff were also important. So 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 that position in place for our customers. Those are the 3 issues. And then 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 exception of the group where we have a direct impact in terms of what we're proposing and we will enforce what we've stated as a matter of our targets. But 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. And so in terms of restructuring, this is something -- well, there are some minor things that I don't want to discuss. And so it's a matter of our basic activities, so 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. So there are certain things that are required by law that we continue those, but we also have to scale back on those type of expenditures. So we've refrained from paying out bonuses linked to the results. We had a pilot and so 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. And so the procurement process, this is also an area that we're going to be optimizing and restructuring the organization. And so we have these mining centers, which will testify to that. So these are things that we're doing the optimization on an ongoing basis. And so managing the cash centers, these are things that are happening. So 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. And this is where I'd like to wrap up our presentation. So thank you very much for your attention. And now I think we'll move on to some questions that have appeared. Then I would ask us to start the Q&A session now.

So ladies and gentlemen, I'll read the first question that the company has received. So the voluntary redundancy program, when will this take place in the company?

So as I mentioned, work is underway with respect to the draft legislation on the functioning of the hard coal mining industry. And so 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. So we can say that we will probably be able to increase that number based on what's happening with that legislative process. So we're working jointly with the ZUS social insurance institution because we'll 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. So we're working with them hand-in-hand. A lot of the work has been done because this will have to do a lot more as a result of this process. And so 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 2 instruments in the law. And to our surprise, even though the number of people who are entitled, which is in excess 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 requests to participate. And so we believe that more people would like to take advantage of this process. So if we look at one-off cash severance payments, we can say that nearly 700 people responded to that. So this would basically fulfill the figure defined in the draft legislation. So this does not surprise us. And so we're working on to be able to increase or drive up that number of people. Because after -- once after the guarantees, working guarantees, labor guarantees being suspended, then it's clear that the number of voluntary redundancies on a nonrecurring basis with cash severance will be higher.

Well, would this be something that would affect current operations, reducing production? Will there be any negative EBITDA impacts as a result?

Well, the question is very interesting because we're working on the subject with my colleague in the management team. What is the -- with Mr. Rozmus. What is the optimum number of people? What's -- how many people do we need? Because this is where we're doing the actual mining. And 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. So 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. So the work is underway here. We're trying to standardize that across the production-related units and departments. This is underway. So I don't think this will have a major impact on our production capacities. So if we look at these leaves, these holiday leaves, this is spread over years. So this is not something that would happen all at once. So 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 administrative staff, so people working on the surface, 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 -- well, this 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 2 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 JSW. 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. And 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. And our remuneration system is somehow petrifying or, well, we can say our heads to the social party to the employees because they've actually pointed out which people should be reviewed and examined and to ensure that only those people are paid who are contributing to the company and its value.

Will [ Parraburca ] be paid to -- the bonus for St. Barbara's festival be paid to employees?

Well, 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 and the company has had negative cash flow for a while, and this could be a fundamental problem had we not had the closed-end investment fund. Well, 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 is 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?

Well, this, as I've mentioned, well, 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 or 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?

Well, I don't know because, as I said previously, this work is underway. And I would emphasize here, this work is very difficult. And here, my 2 colleagues from the management team and I are participating in these talks. And so 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.

Next question. The company is reporting a very low monthly sales of -- external sales of coking coal. Is this because of a softer market or cheaper coal coming into Europe? Or maybe there's been a loss of confidence amongst JSW's partners following the last 3 months of extraordinary events?

Well, the European market is clearly in a difficult position. EU steel production is falling year-on-year. And 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 Dabrowa Gornicza temporarily. And so of course, this is something that's having a local impact. So we've seen some events in the mines which affected the availability of semi-soft coal. And so our partners had to react. And so 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. And 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%.

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?

So as we prepared the foundation for the 2026 economic and financial plan, we embraced basically a run rate. And this is a matter of having in mind where we are in terms of setting up or opening up areas to produce coal. And then we have how advanced our work is on preparing the galleries, capital expenditures, what sort of resource -- natural resource base we'll have, having in mind mining leave as well as retirement attrition, generally speaking. And so 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?

Well, that's true. October, 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 must in order to do that. So 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. And so basically geological mining difficulties have to be factored in. And so that's why I can't -- we can't rely only on a single month.

So the 13.5 million ton production plan, does take into consideration some possible conservative estimates? So you might have planned -- possible, but not planned deterioration in geology and unforeseen incidents? To what extent do you have reserves or provisions?

Well, it's very difficult to assume for extraordinary events. But we have to anticipate certain events or circumstances and we have to organize our operations in such a way to think about things that have happened in the past. Well, we always have a certain margin of error included, but we're focusing on those efforts that would prevent those events from happening.

Next question. If we look at the long-term outlook, what are the strategic major avenues for the company's restructuring or reorganization?

Well, I'll respond to this question. At present, we're focusing on, not on strategic efforts, but on our current operations and 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. And this is what we're working on. That's 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. And 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. And we only have [ want to have ] business support companies. So our operations will be swift. And some people might think these are drastic decisions, but we have to go through a process to convert ourselves quickly into a lean organization. So it's a necessity.

What CapEx do you plan for 2026? What 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. And this means, of course, within the context of the restructuring plan. And so the decision has been made to finish up investments that were commenced, and 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 in subsequent years.

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 giving or stating a given figure. If we look at other mining enterprises, this is something that has to be taken into account. And 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, and 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. And so we want to coordinate our efforts and factor in, of course, natural hazards, we want to manage, 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.

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. Since the work is underway, about 3 weeks ago, we started that process and we're working -- we're in dialogue with the owner, with financial institutions and other stakeholders, and this work is underway the entire time. So 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.

What is the outcome of the work done by the adviser, A.J. Kearney where JSW terminated that agreement after working together for a year? How much money was spent on cooperation with the company? And how much do you think you'll be able to save, thanks to the ideas they've generated?

If we think about the work done by A.J. Kearney, we published a current report. But since we had the termination of that agreement with A.J. Kearney adviser, and we're revising or we're 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. But 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.

Next question. Are you considering any type of capital support from external entities at all at present?

So ladies and gentlemen, the financial operations and the business operations have to take into consideration a variety of scenarios. So we have to be prepared for a variety of scenarios. And that's why we're working to have the windfall tax being reimbursed or refunded. So the company, as we analyze our position is looking at capital support from other sources. And this analysis, well, it has to be a market-based approach in terms of what about the funds that could be achieved from the market. And so we're looking at the ability to obtain funds support in terms of the European approach, CESG, so this is something that limits our capability quite strongly. So we're penetrating the markets in order to secure additional funding from the markets. And that's why we're determined to change our costs to restructure things because potential investors or financing entities will 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. So this is something we're working on. So we would not consider the fact that work is underway on this subject.

Next question. Any other directions of restructuring, reorganization?

Well, I think we're really drilling down on the first 2 that have already been enumerated. And so 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. So 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 this is underway. And we should mention the final outcome will depend on what we agree upon. And 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.

After 1 January, 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?

Well, if we talk about the funds in that closed-ended fund, well, we still have funds there, some money there. And 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. And this is a result of the security or collateral given to the credit structure. Everything that we're doing, well, 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. And so we have support from the owner. So 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, but 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. And we're doing a lot of work across the board. We're bringing order to the company, cleaning things up. And 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. So thank you very much for your attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]