Creamer Media's Mining Weekly Online
Alpha Natural widens Q4 loss, sees potential thermal coal upside
By: Henry Lazenby
Published: 12th February 2014

TORONTO (miningweekly.com) – Coal producer Alpha Natural Resources on Wednesday said it had significantly widened its loss for the three months ended December 31, as lower coal shipments, a large tax charge and a loss on early debt extinguishment impacted on the Bristol, Virginia-based company’s earnings.

For the quarter, Alpha reported a net loss of $358.79-million, or $1.62 a share, 181% wider than the $127.58-million, or $0.58 a share, loss in the same period of 2012.

The adjusted net loss, excluding special items, was $0.52 a share, beating average analyst estimates of $0.62 a share. The Wall Street analysts also expected the miner to post fourth-quarter revenue of $1.18-billion, higher than Alpha’s realised sales of $1.09-billion in the period. In the same period of 2012, Alpha recorded revenues of $1.56-billion.

In 2013, the company reported a 26.8% decline in its freight and handling revenues, and coal revenues decreased 29.2%. Other revenues plunged 30.2%, resulting in the overall decline.

Coal revenues totalled $965-million, down 29% from the $1.4-billion reported in the comparable quarter in 2012.

For the full year 2013, Alpha recorded a net loss of $1.1-billion, or $5.04 a share, compared with a net loss of $2.4-billion, or $11.06 a share, during 2012. Alpha's adjusted full-year net loss was $475-million, or $2.15 a share, compared with an adjusted net loss of $207-million, or $0.94 a share, for 2012.

Alpha said coal sales declined 20.1% to 86.9-million tons in 2013 and that it also experienced an 11.4% year-over-year decline in the average realised price per ton sold to $48.99/t. The two factors combined had an impact on the company’s top line.

The company's US-based rivals Consol Energy, Peabody Energy and Arch Coal had in recent weeks also reported losses as a result of the soft coal prices.

"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," chairperson and CEO Kevin Crutchfield said.

Alpha said that overall, the outlook for thermal coal markets was more “constructive” compared with a few months ago. However, Central Appalachia coal would continue to face declining structural domestic demand and continued natural gas competition.

Unseasonably cold temperatures in North America over the last several weeks resulted in natural gas pricing above $5/MMBtu, increasing activity and setting firmer prices for near-term domestic thermal coal markets. Metallurgical coal markets, however, continue to be “very challenging”, the miner said.

For 2014, Alpha said it expected to ship between 77-million and 90-million tons, including 16-million to 20-million tons of Eastern metallurgical coal, 24-million to 30-million tons of Eastern steam coal, and 37-million to 40-million tons of Western steam coal out of the Powder River basin.

Alpha’s NYSE-listed stock on Wednesday initially rose to $5.28, before settling at $5.20 apiece, up 2.16% for the day.


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