Alpha Natural Resources Inc. has posted loss in Q2 2013 as prices and profit margins collapsed due to a falling demand for coal.
A year ago, Alpha had a margin of US$6.57/ton of coal it sold. In the most recent quarter, this margin shrank to US$2.72.
The amount of coal the company sold was down 19% to 21.6 million t.
Alpha's declining margins and volume drove revenue down almost 28% to US$ 1.34 billion, from US$ 1.85 billion in Q2 2012.
Alpha lost US$ 185.7 million, or US$0.84/share, for the quarter that ended 30 June. A year earlier, it lost US$ 2.23 billion, or US$ 10.14/share, as it wrote down the value of assets and took restructuring charges, for a total charge of US$ 2.5 billion.
Analysts surveyed by FactSet had been expecting a loss of US$0.34/share on revenue of US$ 1.85 billion.
Apart from the pressure caused by coal pricing, the Alpha had unexpected downtime at its Cumberland mine and unfavourable mining conditions at its Emerald mine, both of which hurt production and shipments of some high-margin coal. The company announced on 15 July that the Cumberland mine is shut down while it fixes the roof of a key part of the mine.
Chairman and CEO Kevin Crutchfield said the company is idling unprofitable coal capacity for coal used for heating and steelmaking and “anticipate additional actions may be required between now and the end of the year." The company is therefore adjusting overhead and capital spending to be in line with the company's changing size, Crutchfield said.
Coal inventories at US utilities are shrinking, which should lead to more demand in the future, he said.
The company said it expects to ship 83 million to 91 million t of coal this year.
Adapted from press release by Samuel Dodson
Read the article online at: https://www.worldcoal.com/coal/02082013/alpha_natural_resources_announce_loss_in_q2_296/