TORONTO (miningweekly.com) – Richmond, Virginia-based coal miner James River Coal on Friday said it had become more cautious of the metallurgical coal market, after it posted a 42% drop in second-quarter revenue.

CEO Peter Socha said the metallurgical markets had clearly weakened during the past several months.

“We are a little more cautious about met than we had been earlier this year. We have started to take definitive action to strengthen our balance sheet and improve our liquidity position during this period of soft coal markets,” he said.

In the US, thermal coal markets are under pressure from stricter emissions legislation currently under consideration and a move by power generators to switch to cheaper natural gas to generate steam. The metallurgical coal market, a significant portion of which is destined for the export market to Asian smelters, are also under pressure as China’s growth had slowed, and the market is laden with a supply surplus.

However, Socha said the thermal market showed some signs of improvement. “The thermal markets are still weak, but we can see several factors that may lead to improvement later this year and into 2014,” he said.

James River's second-quarter revenue declined to $160.1-million, down from $277.3-million in the same period a year earlier.

The company posted a net profit of $52.6-million, or $1.16 a share, boosted by a pretax gain of $101.2-million. The results compared with the net loss of $25.8-million, or $0.74 a share, for the second quarter of 2012.

The pretax gain was owing to the company in May swapping $90-million in debt for $123.3-million in 10% notes due in 2018.

The adjusted loss was $1.04 a share, well below 14 Nasdaq analysts' average expectation of $1.33 a share.

Other US coal miners such as Arch Coal, Consol Energy and Peabody Energy had also posted wider losses in the quarter.

James River’s Nasdaq-listed shares responded positively, climbing 11.80% to $1.99 apiece in morning trade.