Good morning, ladies and gentlemen. My name is Bogusław Oleksy. I am the CEO of JSW. We would like to share and present the results of the JSW Group for 2025 today. I'm joined by Jolanta Gruszka and Adam Rozmus. We wanna walk you through the results, so we'll go ahead and kick off at this time. Ladies and gentlemen, 2025 was a special and challenging year for us. The company began grappling with the financial position, financial situation, so these drivers affecting the situation also affected the results of our group. If we look at Coal Production, we produced more than 13 million tons of coal. This was up by more than 6% compared to the previous year. Coke production was also higher. It was above the threshold in 2024 by nearly 3%.
Sales revenue because of the prices commanded in 2025, unfortunately, were down with respect to what was seen in 2024. The net result we generated is better than in the previous year. However, we just reduced the loss. We have our big ambitions we'll talk about later. EBITDA in 2025 was PLN 1.696 billion, and it was negative. With respect to the previous year, it was at a much lower level. The average price of coking coal and coke, which in fact determine or drive our sales revenues, had fallen quite substantially. Jolanta Gruszka will discuss that in detail, so I'll refrain from making any remarks right now. The decline was in excess of 20% in both cases, so very substantial.
We look at CapEx, in 2025, we curtailed the CapEx by more than PLN 1 billion with respect to the previous year. Of course, the financial position had an impact there. In turn we look at the Mining Cash Cost, we achieved the first effects in terms of reducing the MCC, Mining Cash Cost, which is the Mining Cash Cost, the cost in cash it takes to mine a ton of coal. Now, what is our biggest challenge? That's the business restructuring of the Group. This is something we're engaged in running right now. We have several areas we've identified or flagged where we're running this restructuring. This process is highly complicated, multifaceted. The main pillar is operational restructuring. It is starting to produce the first fruits, first effects, this is a very widespread program.
As we see from experience till now, it requires the support of the government, and ultimately, we anticipate support from the European Union. We have to build a very sensible program, restructuring program that will be clear to our internal and external stakeholders. That's why this challenge is material from our point of view, and it calls upon us to communicate very clearly. What we've sketched out in the presentation are the three areas. We have external and internal areas. We have the participation of the trade unions and the actions that we're taking within the group itself. If we look at the state treasury in turn, JSW is now subject to the Act on the Functioning Operation of the Hard Coal Mining Sector. This statute or this law enables us to utilize or take advantage of certain instruments, so safety net instruments for employees.
We will address that a little bit later in the course of today's presentation. This is a very important element which gives us hope in terms of reducing or cutting expenses. The second area, that's support from the Industrial Development Agency. This agency has been designated as the entity that will be capable of providing assistance to companies undergoing trouble or turmoil. The regulations have been revamped in terms of the rules for the operation of that agency, and this should enable us to utilize a variety of instruments to buttress our operations. We have also, in the recent period, entered into some sales and purchase transactions where basically we would sell two subsidiaries to the Industrial Development Agency. This is the PBSz and JZR. These transactions have not yet been completed, but the initial effects have been achieved.
The next very important component of our restructuring plan is a deferral or installment plan for our social insurance contributions, and that applies to JSW and JSW Koks. As I said, this is a very important role of the state treasury to play here. If we look at the social parties of the trade unions, this is not something that can be overestimated. Jointly with the representatives of our employees, we managed to agree on two important vital issues. One is to shorten the employment guarantees, and the second thing is to reduce the labor costs in JSW. This was preceded by negotiations, a large number of meetings with the trade unions, the social party, and we ultimately achieved the outcome of suspending employment guarantees for administrative employees from the management board office and administrative employees.
It seems that this is a very important memorandum of agreement, giving us the ability to do a more profound restructuring on the cost side. I would emphasize here that the role played by the trade unions, the social party, is incredibly important. If we look at the cost side of things, if we look at labor or payroll costs, we've agreed with the trade unions that certain elements would be suspended, certain components would be suspended, and this should make it easier for us to restructure the financing of the group over the next two years, and this should in fact form the basis for doing what we have in front of us, which is to repair the financial situation of our company.
If we look at the overall group, our group consists of, you know, 15 some odd companies, and these also have to go through restructuring. We have to reconfigure the composition of the group. This is something that's happening. As I said, we've divested or sold two of our companies. The other companies are undergoing analysis. Up until now, these companies were support companies for our core business. Nevertheless, we're continuing to analyze the needs, the magnitude of their operations. We're reducing the costs of the structures in these entities, and these are things that are happening. The second area is not so much the financial situation, but as a matter of looking through our business model and our needs, we want to sell off assets, non-core assets.
In the near future, we will clean up our assets and dispense with, get rid of some assets as well. What's another very equally important area is linked to financial institutions. In the recent period, we entered into an annex to the consortium financing agreement. We had very intense negotiations in this period. As a result, we have suspended a number of issues linked to the contract until 31 August. In this period, in terms of when these covenants are suspended, this should be filled in with a restructuring plan. Which we will agree upon with the financial institutions as well as the social part of the trade unions. What's even more important than we have to implement that, we have to execute that plan. The second area, the company is looking for external financing. Here the work is underway for several months.
There was some turmoil as a result of the fact that we didn't have agreements in place with the trade unions. The company is talking about those subjects and is striving to obtain financing that would be used for the stabilization of finances and to enable us to go through the restructuring process. As we know, the most important thing is to have this money and run this process reasonably and effectively. For that period, we have to have the proper financial backing. Having in mind what I've said, I would now like to move on to the strategy. As you've heard, having regard for what's happening in the group right now, the company right now, and the processes that we're running, our strategic objectives that have been identified some four years ago are being modified, tweaked.
That's why we've launched work to update the strategic objectives of the Group. One of the big elements in this process is the restructuring program itself, which we are penning, we're preparing. This will pertain to the overall group, and it will be operationalized at the level of the various entities. We want to redefine materially our objectives. We need to align our business because the time when the previous strategy was prepared, this was more of a time of prosperity. That time has come to an end. We have to redefine our objectives. This needs to be done. No doubts whatsoever about that.
If we take a look at what has been done in terms of executing the strategy up until now, what we've achieved, unfortunately, having in mind what transpired with the finance of the company, what happened on the marketplace for our products, as we can see, both with respect to the EBITDA margin, stability of the financing structures or costs, we have not achieved the intended objectives. Those goals were set up for the period from 2022 to 2030. Having in mind the current market context, they would not be satisfactory to us at present. If we look at safety, the mining industry continues to grapple with risks, especially in JSW. When we think about the set of hazards we face. Our ratios continue to be a challenge.
At the level of the management board, we're saying safety above all with respect to the business that we're running. What we have improved substantially, that's reducing the carbon footprint. This is something that was done with respect to the methane utilization program. We continue to pursue it. Mr. Rozmus will surely say a few words about that because that's an important area for us. The carbon footprint as well as reducing our energy costs, both of those facets are vital. If we look Coking Coal Production in our mix, it's insufficient, but the positive or the trend is positive. The management board took up the challenge to reduce the production of coal that's not interesting to us in terms of the price or the quality.
That's why our analysis about which mines should be the leaders where it's worthwhile to invest in them is what I have in mind. This will be linked to the product and price related limitations or constraints. If we think about production of coal and coke, at the beginning of the presentation, we had a few figures given. In terms of implementing the strategic objectives from 2022, we are far away from the objective. This is an area we will redefine because the market is evolving and we have to customize or adapt ourselves to the market and not the other way around. We are fully abreast and Jolanta Gruszka will show us the fuller context of the market. In terms of Coke.
The metallurgical industry is the customer and profound analyses show that we have to redefine our goals, and the product quality is better than we had initially posited. Having in mind the commercial contracts we have, this is not quite the level we would like to have or reach. We need to weigh that the mining sector has an attribute that geology can play tricks on you. Sometimes it's difficult to define the qualitative factor in a precise manner. As I said, in geology, you can encounter everything, better conditions, worse conditions than diversification of revenue. This is something we're doing. When we think about revenue diversification, we're thinking about non-core operations as well. We're considering some disinvestments or deinvestments, divestments. That means these parameters will also need to be redefined. Those are the fundamental issues linked to executing our strategic objectives.
In the near future, we will update these objectives. Make sure that we put up the signposts in the right way. The strategic avenues or directions of activity would be then aligned to the current market situation and what the market actually anticipates because our strategy covers or spans a period of several years into the future. I think that would be more or less it in terms of some preliminary remarks. We can drill down into some of the operational results and we'll show you in detail what our achievements were in the previous year.
Ladies and gentlemen, in terms of our ongoing operations, we undertook certain optimization efforts with respect to Coal Production. I hope these slides will show that we've embraced the right directions and as a result that will drive up extraction or outputs.
Quarter-on-quarter. In Q4 2025 versus Q3 2025, we were able to increase Coal Production by 5.2%. If we look year-on-year, 2025 versus 2024, we were able to grow by 6.2%. It's more than 750,000 tons of coal. It's volume. At the same time, we're consistently executing our quality parameters. One thing that you can see that we've increased by 10% the production of coking coal. Steam coal, we have limited that quantum and we're focusing on coking coal with the highest possible quality parameters. If we look at corridor works. We have clearly reduced those numbers in 2025 versus 2024. This is something we're doing as a matter of purpose. We had put in place certain conscious decisions in order to have places to mine.
We had to reduce the amount of corridor works. We had done the initial preparatory work in previous years and that's why it was possible. We're down by 9.5%. We had done in previous years more than 70,000 m . We've been able to reduce that to below 70,000 m. The number of production lines, let's put it that way, it's smaller than the number of active long walls. This is a result of decisions made to focus our extraction efforts on long walls that are longer. That means we don't need as many corridor works to do that. At the same time, we've decreased that by nearly 8% from 2024 to 2025 in terms of the active long walls. That's for improving production. If we look at coke production from Q3 to Q4, it was down slightly.
Year-on-year, it was up at 3%. If we move on to the market environment, I'll give the floor now to Jolanta Gruszka to walk us through what was happening in the market.
Let's begin with an overview of events that affected coking coal and coke. We saw economic slowdown and geopolitical softness, as we mentioned in our results communication. The market where our company operates, unfortunately, was a buyer's market. Softer internal demand in China because of the crisis in the construction sector meant that the top quality hard coking coal, premium low vol, the price was below $20. It wasn't until the end of the year that we saw an upward price adjustment or correction. There were major differences in terms of prices in Australian ports and the prices of products delivered to China.
People, the traders were selling on other markets and that had a downward impact on prices. If we look at coke, last year we saw oversupply a glut and that was because of the product coming on board from Indonesia. We talked about that many times. The demand for coke was also down at the same time. We had the transport of coke. Well, it was down by some 15% and fell to 27 million tons. In 27 million tons, we can say that Indonesia has delivered more than 6 million tons of that 27 million tons. Indonesia has increased its exports 4x over 2023. This country is now number two amongst the coke exporters. We as Poland have lost our number two position and we're now number three in terms of coke exporting.
In 2025 versus the previous year, the Indonesian coke exports grew twice or doubled to more than a million tons. It's most of the import from abroad in Europe is coming from Indonesia because the restrictions apply to India. The European market is not protected in any way. It's worth mentioning that the fact that production utilization of coke is at a stable level around 30 million tons and as opposed to coking coal. The European Union doesn't have to be dependent upon overseas imports of coke. What also is important, that glut meant we had CSR of like 68%, 62%, so premium level. We can say that the prices were at a low level.
There was a range of 0.98- 1.08, and so the average ratio was 1.13, and that means that coke cannot generate a positive financial return with such a low ratio between coke and coal prices and coke prices. The next slide. Oh, there we go. Now it's clicked over. Here we want to show you the major sales markets for JSW Group. We have emphasized many times that we have long-term stable contracts with the clients from Central and Eastern Europe, and we show you that here on the graph that into Poland and Austria, Czech Republic and elsewhere, and then Ukraine.
If we look at the Coke Segment, 40% of our revenue comes from sales outside of the European Union, primarily countries not belonging to the European Union, but in Europe, Serbia and Ukraine, and then we have, you know, the Indian market. We talked about the presentation and the strategy. We see higher sales of coke to non-EU markets, but that's a result of the shrinkage of the market in the European Union. At the same time, it's a matter of diversifying our overseas markets and thinking about selling of the coke and coal produced in JSW mines. Primarily steel mills are buying from us. You also have iron manufacturers, non-ferrous metal mills, carbide producers. You also have sugar plants. These type of entities are purchasing coke from us. The next slide is one of our traditional slides.
We want to show you the fundamental market trends over the most recent periods. When we talk about steel, the global steel market was driven by two major factors. This is growing protectionism of the market. This is something that we flagged multiple times. In 2025, the United States added steel tariffs. They reorganized the global market and had a major impact on the European steel industry. After those tariffs were added on imported steel, so they lost a portion of the market. At the same time, EU started to receive cheaper steel from other countries that couldn't access the U.S. any longer, and they were looking for alternative markets. The second factor was growing steel exports from China. Estimates suggest that it grew by 9% last year over the previous year.
According to the data produced by developed by the World Steel Association, there was a decline in EU of 2.6%, 226 million tons. We're talking about a decline year- on- year. In 2025, according to Eurofer, the imports grew by 8%, but the exports from the EU fell by more than 11% in Q4 of last year. As we're waiting for the situation to improve, having in mind, you know, the planned implementations in, well, the production grew by 8.2% in Q4 over Q3 of the previous year. Global steel production was more than 1 billion tons, but it was down by 2%.
It was 1.88 billion tons, so 1,880 million tons. I want to show you some of these figures to show you the scale of the largest players. 900 and some odd million tons, even so, the production was down by more than 4% over the previous year. Steel production in China is 52% of global production. The second major producer of steel is India, that's the only place in the world that has seen higher steel production, it was 10.4% growth year on year. It's 665 million tons of production in India. If we look at steel prices, the average price of HRC fell by 4.6% compared to the average for the previous year.
In Q4, waiting for the import restrictions, prices grew by some 7% versus Q3 of the previous year. If we look at the average price for rods last year, it was down by 1.7% compared to what we saw in 2024. For this segment of the market, there was no increases. Prices fell by 4% with respect to Q3 2025. If you look at coking coal prices, the factors affecting the market I've already discussed. Let me sum up the prices. Australian coking coal in 2025 premium and low volume, so it's $178. It was down by 21.7% with respect to the average in 2024, so it's $288. In Q4, as opposed to Q3, it was up by 9.1%.
The average price for semi-soft last year was $116, and this was also lower, so it was down by some 19.4%. That was for semi-soft. In Q4, the semi-soft prices grew up by 9.1% in Q4 versus Q3. I think it's worthwhile to mention that in 2025, the semi-soft price grew with respect to premium low vol, moving up from like 62%-65%. Coke prices, Chinese coke prices based on FOB, 64%, 67%, 62%, so it was to $100 and some odd, and it was down by $212. It's down by 24.6% compared to 2024. In Q4, however, the average price was up by 9% versus Q3 of the previous year.
As we've emphasized multiple times, coke prices are usually higher in Europe than in China. Blast furnace coke imported to Europe with CSR of around 68%, 63%, having in mind the ARA port deliveries, so it's $243. Unfortunately, prices saw a downward trend, and they were down by 24% in 2025 over 2024. In Q4, we saw an increase in the blast furnace coke quotes or prices in the ARA ports. It's up by 6.7% to $242. On this next page, we show you the ratio of prices for JSW products versus market prices in a given quarter. This is the average from July to November. In Q4, we had an increase in the benchmark price over Q3, so that was an increase of more than 2%.
If you look at the average sales price to external buyers in the benchmark period, we didn't see any change, that ratio was 97%. If we look at coke, we saw the benchmark price falling in Q4. We're talking the blast furnace coke prices based on CIF to the ARA ports. Once again, having in mind the prices in Q3, it was more than 6% difference. If we look at all the product ranges within coke, it was, you know, 107%. Steam coal prices. If we look at the energy price and the sales to power plants, this was down by 2.7% with respect to the previous quarter.
The price achieved for steam coal in Q4 was up by 8.8% over in Q4 over Q3, which means that our ratio of our prices to PSCMI, we were able to bump that up to 93% in Q4 as a result of that price movement. If we look at the sales of coal produced in the group, here I can say the sales of coal to external customers in Q4, it was PLN 1.3 billion, so it was up by 2.8% over Q3. We had higher sales volumes up by 11.4%, and then we also had higher prices.
Those prices grew by 1.7%, steam coal prices moved up by 8.8% across the year, even though we sold more. The volume was up by 21%, but the revenue was down by 12.8%. Well, we had the PLN 5.16 billion 2025. The average selling price was down by 23.7% for coke and coal, and it was down by 34% for steam coal across the year. Those were sales to external customers, but the sales were called to internal customers to our plants. We took in mind the optimization of, let's say, inventories of coke and coal. The next slide talks about the sales of coke and the sales of coke and hydrocarbons. We had PLN 969 million in sales.
This was up by 16% over Q3 because of the volume increase, but the average price fell, however, by 3.7%. Across the year, the revenue in the overall Coke Segment was PLN 3.5 billion. With respect to 2024, the overall revenue fell by 24.3%, and the main driver was the decrease in prices. That was a price decrease of 25.6%, whereas the volume was down by 2%. The last slide from our market overview is to talk about our inventories. At the end of Q4 2025, we had lower inventories of coal as well as coke. If we talk about coal, we reduced stocks or inventories by more than 21%. In terms of coke, we reduced that by more than 22%. Coke then later was up by 7%, or coking coal was down.
That would be it more or less in terms of my overview of what happened in sales.
Ladies and gentlemen, we can talk about now the investments in the JSW Group. In 2025, we were primarily thinking about savings to reduce capital expenditures. Of course, these limitations didn't pertain to safety, and I would confirm that on behalf of the entire management team. We wanted to improve working conditions and safety. We want to have new, let's say, longwalls opened and new areas opened up. The next thing that's worth mentioning is the limitations of methane emissions. We continue to pursue the methane emissions reduction program. We're now down by 24% compared to 2018. We're on a good path. We're reducing the amount of methane directly in the rock mass itself, and that's making it a safer workplace.
We're reducing emissions of CO2 as a result. The second thing is the fact that we're running investments to utilize economically methane. Today, ladies and gentlemen, some 15-odd% of the energy in JSW, which is an energy-intensive business, we're able to produce ourselves utilizing electricity, utilizing the methane that we capture. As part of our discussion of these slides, we can look at the capital expenditures in the group on a quarter-on-quarter basis. We can say that CapEx is down by 11.8%. Year-on-year, we're down by 25.2%. We've really scaled back investments CapEx. That applies to the coking coal or the Coal Segment as well as the Coke Segment and other segment. I'll focus on JSW itself. We have CapEx down by more than 23.8% year-on-year.
That's in terms of our investments for property plant and equipment, expensable mining pins, outfitting expenditures, and then the IFRS sort of depreciation and modernization. This is in line with reducing the number of active longwalls. We would concentrate our mining activities on certain sections. If we look about the capital expenditures for coke, so we have a slight increase because of continued investments. Year-on-year, we're down by some 47% almost in terms of CapEx in cokes. There are certain investments that are being continued. In coke, we want to wrap up the investment in the power unit in Radlin CHP plant, and then we're modernizing coking battery number four. I would mention that all the decisions about curtailing investments in the group stem from the need and to is that we have a very well-written plan in that area.
Thank you very much.
Ladies and gentlemen, I will try now to show you the financial side of the information we've delivered to you so far. This is a very precise and extensive information. If we look at sales revenues, as I mentioned at the outset, the revenue in 2025 versus 2024 did diminish by nearly 17%. That is a major swing, major loss in terms of sales revenue. In just a moment, I'll provide some more details on that. If we look at EBITDA net of non-recurring events at the end of 2025, it was nearly PLN 1.7 billion. That's a negative EBITDA. Whereas previously, we had a positive figure in 2024 of nearly PLN 400 million. If we include those non-recurring events, then the EBITDA in 2024 was negative at PLN 6.5 billion.
In 2025, the EBITDA was PLN 4.988 billion. Working capital, net working capital, including the closed-end investment fund, at the end of the year, we were at PLN -4 billion as opposed to the initial or the starting point at the end of December 2024 of PLN 2.5 billion. Net working capital without including the fund was down by more than PLN 800 million. The net financial result, as I said at the outset, we had a slightly better result in 2025 than in 2024. This is not our ambition to be here. We will work to improve that. We reduced that loss from PLN 7.2 billion to PLN 6.2 billion in 2025.
Having in mind what Jolanta Gruszka said, if we think about the swings in revenue, this change was driven by two factors. If we think about coal and coke, the first thing is volume. With respect to coke volume, we have a positive change, and so the volume increase exerted a positive impact. Here, as Mrs. Gruszka said, the difference is nearly PLN 1.3 billion. For steam coal, the volume, we had PLN 410 million, but the price had a negative impact of, you know, some PLN 400 million. If we think about coke, as we can see, and this is what Mrs. Gruszka referred to, we had the volume. The impact of coke sales volume, this was a negative impact on the EBITDA bridge or sales revenue of PLN 78 billion.
The impact of the coke price change was even higher and in excess of PLN 1 billion. As a result, the change of more than 16% with respect to revenue, well, this led to total revenue in 2025 of PLN 9.4 billion. We moved down from PLN 11.3 billion to that. If we talk about revenue, we need to talk about cost in order to be able to present our results. Here is our information about costs by nature. We reduced costs by 5%. We believe that there is potential to continue reducing those expenses. They've been reduced substantially versus 2023 in terms of employee benefits. More than PLN 270 million decrease. Materials are down by almost PLN 220 million. Depreciation amortization is down by almost PLN 200 million.
Energy, this is something that Mr. Rozmus referred to. This is result of the methane capture activities, so it's more than PLN 150 million. We have the reduction in costs of external services. We see potential to continue reducing costs. Generally, what are the drivers of cost changes? Our overall costs in 2024 were PLN 15.76 billion in 2024, and they dropped to PLN 14.979 billion. I said there is potential to reduce those costs. I flagged those elements, but here graphically you can see how this individual, let's say, cost items or buckets affected our costs by nature. Now, a subject that is what we're working on, what we're concerned by and driven by, that's the Mining Cash Cost and the cash conversion cost.
If we look at MCC, we have managed to reduce MCC by more than 8%. As I mentioned previously, we see the opportunity to continue reducing costs. This ratio can come down. You can see the decline. It went down from 804 PLN per ton to 738 PLN per ton. This is not a reflection of what our ambition is. Our ambitions have to come from what the market offers, and this is something that we need to work on. If we look at cash conversion cost in turn, unfortunately. Well, in Mining Cash Cost, it's down by 8.3%, whereas in cash conversion cost, it's up. Expenses are up for cash conversion cost.
The CCC itself, the combined CCC, moved up from PLN 317 to PLN 347. As we see, costs are driving it up. Whereas the decline is because of production volumes. As I showed you at the beginning, we want to update our strategy here. These figures are not at a satisfactory level, and thus we want to revise our strategic guidance. If we break down that cost into the unit Mining Cash Cost, here you can see where the biggest impact, negative impact, well, that was the impact of volume. Well, negative in the sense that it reduced that cost. We had the volume impact, consumption of materials and energy, and the employee benefits. Those were the main areas which enabled us to reduce the unit Mining Cash Cost.
That's why our efforts need to be focused on those areas where we have achieved this outcome. We also have external services which saw an increase. That's due to our liquidity position. This is something where it's a goal that we want to regulate our payables. Many activities are required. We've already undertaken them. We're talking with our business partners who render services and deliver materials to us to have longer payment terms. We have limitations in investments, as Mr. Rozmus said. If in turn now we move on to the unit cash conversion cost, we can say that this increase was driven by the consumption materials. Net of coal feedstock, that second big area, which drove up that cost were taxes and charges. That's, of course, due to, let's say, emissions due to the ETS regulation.
We have an increase of essentially PLN 30. We can say that ETS was largely responsible. We look at the EBITDA drivers for the JSW Group, in this bridge that you saw for revenue. Volume had an impact and price had an impact. Those are some of the most important factors. Impairment losses had an impact. It's a gigantic impact, but when we compare that to 2024, it's smaller by more than PLN 3.5 billion. We're talking about impairment losses for non-current assets. That's the major factor in 2025. We've also reversed an impairment loss on one of our assets, which means we have a positive figure of, let's say, PLN 76 million. We have reserves or provisions for returns of emission rights.
They have a smaller impact, but in total, this is PLN 3.273 billion . We have the operating segments because we follow the segmentation in our business model. EBITDA here in the Coal Segment was PLN 1.5 billion. In the Coke Segment, it was negative at PLN 58.7 million. In the other segment, it was also positive at PLN 26.7 million. If we were to look at that without the one-offs, we would have, you know, EBITDA of nearly PLN 1.7 billion. Net working capital has changed. But the major elements, the major drivers are inventories of nearly PLN 1 billion, trade and other receivables of PLN 847 million. You have cash and cash equivalents of nearly PLN 800 million.
The big impact here is from trade and other liabilities, current provisions, and other current liabilities. These things have an impact. I haven't talked about loans and borrowings because they're a fixed part of our financing structure, and so that has an impact, or the level of loans and borrowings have an impact on the net working capital. We can look at cash flow. The previous year, 2025, we started 2025 with cash from the end of the previous year at PLN 885 million. As a result of all of these things, all these factors, depreciation, change in inventory, so on and so forth, that meant that at the end of the year 2025, we had cash of slightly less than PLN 800 million. This is where I would like to wrap up the financial portion of our presentation.
I think we can come on to the next portion of our presentation. These would be questions, and I hope we're gonna be able to provide answers.
Ladies and gentlemen, I'll read out the questions the company has received. Please present in 2026 how much CapEx would be in JSW and the overall group.
Ladies and gentlemen, in 2026, this is continuation of our limitation process. Yesterday, the company published forecasts of CapEx for 2026. For the group, it's PLN 2.044 billion . Coal Segment, it's around PLN 2 billion. Let me emphasize the limitations of CapEx do not affect the run rate and enables us to do investments to improve safety. When it comes to planning CapEx for subsequent years, this is something we're doing under the framework of the restructuring plan.
I think we could add that having in mind CapEx in previous years, this CapEx in previous years was very high. Even though this decline has materialized, this will not affect quantum of production or working conditions in the company.
Thank you. After the CBAM implementation, do you see any more activity in the coke market?
I will respond to this question. Even though this CBAM has been fully implemented in Q1 of this year, this has not led to higher steel production in the EU. We see declines in steel production in Q1 compared to Q1 of the previous year by some 2.1%. In March, this decline was 4.8%.
In the longer run, introducing the CBAM mechanism, having in mind the announcement of an implementation as of July of this year of a more rigorous system of safeguards to protect the European steel market, this would form the basis for expectations that steel production would grow in the EU, and that would mean that there would be more demand for our products, above all coke. We see statements have been made to fire up blast furnaces after a downtime. This is true also of the furnace in Dąbrowa Górnicza. We have a lot of uncertainty because of the war in Ukraine, and that's why there's a lot of reticence to make decisions. It would be difficult to assess what will happen if this conflict continues to last. All of these factors can affect the market, and the level of uncertainty is quite high.
Thank you very much. Can you state the plan when JSW can utilize the act on restructuring the mining industry? How many employees have decided to utilize the safety net under that amended act? Mining leave and one-off cash severance payments. What does the Management Board believe? What's the optimum headcount in JSW and the other companies to achieve its production targets?
Perhaps I can respond to that. Last year, that act on the functioning of the mining sector was enacted to provide support to employees of the mining industry. JSW is now a target of that act, that law. This is a mining-related act or statute. Certain instruments have been identified which employees can utilize. This is mining leave for people working in the coal preparation plants, and then we also have one-off cash severance payments.
Under that framework of this law, we're expecting that the process, the full legislative process, will be brought to fruition and completed. The Council of Ministers would also have to adopt a program for the mining sector, hard coal mining sector, and this was adopted by the cabinet two days ago. That means we have the opportunity to take advantage of that mechanism. In two rounds, we want to give employees the ability to take advantage of these instruments. What we have defined at present in terms of the number of employees who could utilize that, so in total, the number is 4,200 people would be able to utilize those instruments. That would give us a lot of cost breathing room if that's achieved. That's why we have the determination to prepare our staff, our departments to follow this process.
There's a lot of technical things that need to be done. We need to vet employees or check them. In terms of the social insurance institution, that's something that's underway. We believe that in these two rounds, we'll give the opportunities for these employees to utilize that safety net.
Thank you. Does JSW want to use a loan or financial support from the Industrial Development Agency?
There have been statements made by the Ministry of State Assets that this opportunity would exist for some time now. Having in mind our situation, our financial position, and the ongoing restructuring, of course, we want to tap into the opportunities that it will have. I say it will have because even though this statute has been enacted by the Sejm in the Senate, the signature of the President is still missing.
From a formal point of view, originating those opportunities by the Industrial Development Agency would not yet quite be possible. Since we need that support, we are working on a loan instrument with the Industrial Development Agency, ARP. The work is quite intense, and so we're counting on being able to secure funds from ARP at the right time. The change that was required pertains to the ability for ARP to grant loans to entities of particular importance. That list of entities now includes mining companies, miners. That means that there's an opportunity for ARP to provide support. As I said previously, what we've been working on, making sure that we don't squander this time. We don't have too much time. We're counting on being capable of securing this loan. Thank you. Next question.
After reducing the Coal Production target for 2026 and having M9 in Pniówek changing of the longwall, what is the quarterly split of production to the rest of the year? What's the contingency plan if we get behind in terms of opening up that longwall?
Having a smaller extraction volume in 2026, this is because of events that transpired in December 2025 in one of the parcels in Pniówek. We had some methane and rocks, we had to redesign one of the longwalls. This is M9. That's a difference of 250,000 tons. We gave a report in the current report section. That's in terms of framing the situation itself. The ability to set up a longwall in this region, we had to get the positive opinion of the commission that looks at threats or hazards.
We've received that decision. We're preparing some tunneling for M9A because we'll add an A to that. This should be done by the end of the year. We have good parameters of the coking coal. We can't wait to add that wall to our longwall to our production output. We have an alternative solution. In Pniówek, we have some efforts with respect of longwall number 11. There are two sub- parcels. We have W3 in a slightly different place in a different layer. Basically, we're securing our ability to fill in that to production if we're not able to set up 9A.
The group extracted 3.94 tons, of which 2.8 tons was 2.8 tons. The coke production was 0.7 tons in Q1. To what extent is this supporting the achievement of the full- year objectives? Do you see the ability to maintain those annual plans without any risks?
The results of Q1 2026 support the achievement. We don't report that in the quarterly reports. We're in the process. You have the right run rate for production. Today, the management board has not identified an elevated risk in terms of the volumes, assuming that we're going to be diligent operationally and that we continue to execute those plans that are required for production. Then we have, you know, employee attrition because of the safety net mechanisms, but we're going to have to do certain things to make sure that the production run rate is maintained. You have basically impairment losses for Zofiówka, Budryk, and a reversal in Pniówek. Then you also have impairment loss for a receivable from JSW Koks.
What are the cash costs, CapEx, and interest rate? What sort of things did you have in mind in terms of these tests? Is this something that's a partial result, or do you think there's a risk that you might have to take additional impairment losses?
Well, the detailed description of these tests, impairment tests, can be found in a note in the financial statements. I think it's 6.4. Those issues are presented there in the financial statements. I don't think we should look at that right now. This test, impairment test, is not a simple mechanism that we would be capable of presenting here right now. That note, 6.4, gives precise information. I would ask you to look at that, scrutinize that note. It's on page 42. We give precise information about how that impairment test was run.
Thank you. After entering into the preliminary contracts to sell PBSz and JZR, are you considering selling off additional assets? If so, what other areas of the group could be sold, and what would be the impact on operating expenses and cash?
If we look at group restructuring and divestment, I talked about that during the beginning of the presentation, and I gave you the initial postulates. The two entities you referred to, which are being sold, this process hasn't entirely been completed yet. The closing of that transaction will take place on 30 June of this year, and then we'll be able to say that we've been able to get rid of some entities within the group. If we look at the other entities in the group, analysis is still underway in progress. As I mentioned, we're doing analysis within the group and looking at various assets.
We'll move on to a phase in the near future when we'll say which areas will be undergoing restructuring. We've done some testing here. In other words, we've vetted or checked how various companies could be sold and what sort of interest would be generated. It would be difficult right now to say or talk about the impacts on liquidity, but we are giving serious consideration to restructuring of the group. If we're supposed to restructure the core areas of the business, then other companies within the group will also have to go through that process.
Thank you very much. Next question. The strategy of JSW suggests that you'll have more than 90% of the product mix in the form of coke and coal. What are the three most important factors of competitive edge, geology, CapEx, replacement CapEx, or logistics? Under what parameters would you have the breakeven, cash breakeven achieved?
All of those elements are extraordinarily immense that you've mentioned in order to achieve that goal. First, geology, and then, of course, productivity of longwalls. This is the foundation of costs. In the long run, this has the biggest impact on unit cash cost or Mining Cash Cost. Basically, the recognition, the surveys, this is clearly the case. That's very important because that gives you the ability to design the longwalls and choose the ones with the best parameters. The next thing that's very important is the mix and the quality of the coke and coal.
The actions the company is taking are designed to get the best or extract the best possible coke and coal and then to utilize the coal preparation plant in order to have a higher recovery rate of coke and coal. The organization of work and cost discipline are also very important. Rationalizing fixed costs, variable costs, all of those things have to work in tandem in order to achieve good outcomes.
Let me add to that. If we look at the situation in which we achieve on a permanent basis a cash break-even point, what we're trying to achieve is for revenue to be higher, the unit revenue to be higher than unit cost. We can't really influence costs. Sorry, revenues. This is what Jolanta Gruszka talked about. We track that, but we don't have any impact over the specific revenue.
Where we can be active is on our costs. This is the primary area of our activities and efforts. We're analyzing these costs not only on block, but we're breaking them down into individual buckets. As I mentioned previously, the market is merciless. We have to adjust to the market, not the other way around. Our cost reduction efforts are treated as of paramount importance. If a mine is not capable of reducing its costs sufficiently and improving its efficiency, then we'll have to scale back our capabilities because the business has to generate on a permanent basis its profitability. This can only be done if revenue is higher than costs.
Thank you very much for the extensive response and comprehensive. We're talking about the sales of coke and coal. Why do we have a low level of sales, which is much below production? Is this a problem in terms of the sales markets in Europe or is there some other problem?
Ladies and gentlemen, if we look at the data in 2025, we sold to external. This was down, it was below 3.7% below in terms of production. If you look at the total sales to external markets and the internal. In Q2 and Q4, it was actually lower than in production. We've said many times, this is something that hinges on the changes in the structure or mix of production and other factors, which have been discussed multiple times. If you look at individual quarters, let's take a look at Q1 of this year. We've published information about our operating results.
In Q1 of this year, and the sale of coke and coal in total, both internally and externally, was just like in Q1 of last year, was lower than the production level. Why is that the case? In Q1 of this year, I would flag two reasons. First, the contracting for Q1 was done on the basis of production forecasts prepared at the end of last year. They had assumed a lower level of production, but the actual output is higher. That's one factor. The second factor is related to the market. We don't see the effect of implementing CBAM. I already mentioned about some of these declines quarter-on-quarter. Q1 was a period in which, and this is something we showed in the report, in which prices for coke and coal rose.
This was not because of changes in the foundational principles of the market. This was a result of certain weather phenomena in disruptions in Australia. This was not something that could be planned by our clients. On top of that, the outbreak of war in Iran led to higher uncertainty and other types of market risks. This had an impact on or led to buyers, you know, buying less optional quantities.
The next question, to what level of CapEx on a quarterly basis do you wanna come down to in order to achieve liquidity? To what extent will this limit future output, and to what level?
The company wants to reduce CapEx in 2026 significantly because of our financial position. This limited level of CapEx is linked to what will give us safety as well as, you know, the means of production.
In terms of achieving the run rate, PLN 13.3 million in 2026 is something that we uphold, and so we wanna have CapEx that would be aligned to that run rate.
What sort of annual average run rate are you planning over the several years?
I can't speak to that directly. We're working on the financial model right now. We're preparing those documents, so I'm not gonna give you any specific figures right now. I apologize for that.
In terms of the unit MCC, how low do you want to go on the unit MCC? What is your ambition?
The company published the unit MCC for 2026, and the goal here, the objective is set at PLN 577 , PLN 570, PLN 577 . As we said, last year it was PLN 738.
This is a pretty big decline in unit MCC, and there are a number of efforts being taken by myself and Mr. Rozmus. We've talked about it. This is CapEx, costs of external services, cost of materials. Every złoty, not only because we have much, that's much less cash, this needs to be subject to a review. This has to lead to a major decrease in costs, especially the ones other than payroll. This is the goal for this year. Is it satisfactory? I don't think so, but it's realistic. We have to obtain that level. Let me mention, the market dictates at what price or what price it wants to pay for the commodity. Of course, overlooking political elements, Mrs. Gruszka talked about that, because all these regulations, all these market protection mechanisms, they act in a bi-directional pace.
If we wanna protect the European market, other markets utilize a variety of instruments. On top of operational productivity, we have to be highly flexible in our operations in order to be able to react to what's happening on the marketplace.
Thank you very much.
If you will allow me, since we've completed the Q&A session, once again, I'd like to thank you for your participation in our conference. I'm convinced that in a year we're gonna be able to talk about having totally different results. I would like to thank you once again. Bye-bye.