Alpha Natural Resources loss widens in 2013

US coal producer, Alpha Natural Resources, has released its Q4 and full year 2013 results, recording a fourth quarter net loss of US$ 359 million. This compares to a net loss of US$ 128 million in the fourth quarter of 2012.

Challenging year

Company CEO, Kevin Crutchfield, commented: "2013 was a challenging year for Alpha and the coal industry. After completing an extensive restructuring initiative in 2012, we announced further cost reductions in the fall of 2013 to better match our production and overhead expenses with current and anticipated market conditions. These are always difficult decisions because they affect employees and their families, but they are necessary in these challenging times. We have also actively managed our balance sheet to improve financial flexibility and enhance cyclical resilience by opportunistically accessing the capital markets and agreeing to monetize a portion of our Marcellus shale gas acreage.”

Safety improvements

"While the coal markets continue to face headwinds, we can never take our eyes off the safety of our employees. I'm very proud of the Alpha organization and want to commend everyone on their continued improvements in safety, which include meeting our 2013 objectives under the National Mining Association's CORESafety 0:50:5 (zero fatalities plus a 50% reduction in total reportable injury rate in five years) safety improvement initiative. As a result of our efforts, we experienced the lowest level of reported injuries of any year in Alpha's history. As we have said on many occasions, Running Right is the backbone of our culture, and it's working."

Cost savings

"Operationally we achieved strong fourth quarter cost performance in the East. Eastern adjusted cost of coal sales were reduced by more than US$ 7/t compared to the prior quarter. This was largely driven by normalized production at Cumberland, one of the most profitable mines in our portfolio. In addition, we have now largely implemented the cost savings we communicated during our last earnings conference call. We expect these savings to be at least US$ 200 million annually beginning in 2014," Crutchfield continued.

Financial Performance

Total revenues in the fourth quarter of 2013 were US$ 1.1 billion compared with US$ 1.6 billion in the fourth quarter of 2012, and coal revenues were US$ 1.0 billion, down from US$ 1.4 billion in the year-ago period. The decreases in total revenues and coal revenues were primarily attributable to lower average realizations and lower shipments of metallurgical and steam coal. Freight and handling revenues and other revenues were US$ 110 million and US$ 19 million, respectively, during the fourth quarter of 2013, versus US$ 165 million and US$ 38 million, respectively, in the fourth quarter of 2012.

Coal shipments

• During the fourth quarter of 2013, metallurgical coal shipments were 4.4 million t, compared with 4.9 million t in the fourth quarter of 2012 and 5.0 million t in the prior quarter.
• Alpha shipped 9.3 million t of Powder River Basin (PRB) coal during the quarter, compared with 11.6 million t in the year-ago period and 10.1 million t in the prior quarter.
• Eastern steam coal shipments were 6.8 million t, compared with 9.4 million t in the year-ago period and 6.7 million t in the prior quarter.

Full Year 2013 Results

• For the full year 2013, Alpha reported total revenues of US$ 5.0 billion, including US$ 4.3 billion in coal revenues, compared with total revenues of US$ 7.0 billion and coal revenues of US$ 6.0 billion during 2012.
• The year-over-year decreases in both total revenues and coal revenues were primarily attributable to lower average realizations and lower shipments of metallurgical and steam coal.
• For the full year 2013, Alpha's coal shipments totalled 86.9 million t, compared with 108.8 million t in the year-ago period.
• Metallurgical coal shipments were 20.1 million t for 2013, compared with 20.3 million t shipped during 2012.
• Shipments of PRB coal and Eastern steam coal were 38.2 million t and 28.6 million t, respectively, during 2013, compared with 46.7 million t and 41.8 million t, respectively, during 2012.
• The year-over-year decreases in shipments of PRB and Eastern steam coal primarily reflect Alpha's actions to match production with demand.

Edited from various sources by Katie Woodward

Read the article online at: https://www.worldcoal.com/coal/12022014/alpha_posts_fourth_quarter_loss_504/