Armstrong Energy recorded a loss of US$162 million in 2015 on the back of substantially lower revenue from its coal sales.
Revenue was US$82.2 million in 4Q15 to bring annual sales to US$360.9 million – 22.2% and 18.3% lower respectively than the same periods in 2014. The fall in sales revenues comes on the back of falling sales volumes – a result of weak demand.
According to its earnings release, the company sold 7.791 million short t of coal for the year, down from 9.419 million short t in 2014.
Low natural gas prices and warm winter weather in the US hit demand for thermal coal from utilities. Meanwhile, stockpiles of coal at power plants hit record highs, further denting demand for coal from mining companies.
The company is now expecting another fall in coal sales in 2016 as the industries woes persist through the year. The US Energy Information Administration recently forecast that natural gas would overtake coal in the US energy mix for the first time on an annual basis this year.
“Due to the current economic environment, Armstrong has taken steps to rationalize its production to meet current demand levels,” the company said in its results statement. As of 1 March, the company had just 5.6 million short t committed and priced for 2016.
The company also announced steps to preserve liquidity and manage operating costs. It reported US$67.617 million in cash and cash equivalents and US$16.7 million available under its revolving credit facility at 31 December 2015 against current liabilities of US$45.945 million.
“We believe that existing cash balances, cash generated from operations and availability under our revolving credit facility will be sufficient to meet working capital requirements, anticipated capital expenditures and debt service requirements for 2016,” the company said.
The US coal industry has been hit by a swathe of bankruptcies,, including former market leaders Alpha Natural Resources and Arch Coal. Meanwhile, Peabody Energy, the country’s largest coal production, said recently that it may not be able to continue as a going concern after missing an interest payment deadline on 15 March.
Edited by Jonathan Rowland.
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