Coal producer Alpha Natural Resources Inc. (ANR) on Wednesday reported a loss for the second quarter that widened from last year as one-time charges of more than $2.5 billion offset an increase in revenues. Looking ahead, the company lowered the top end of its forecast range for fiscal 2012 shipment volumes. Shares of the company are down more than 7 percent in the regular trading session.
Alpha Natural Resources acquired rival Massey Energy Co. in 2011, but its profits have been impacted by acquisition charges and inherited litigation costs.
Kevin Crutchfield, Chairman and CEO of Alpha Natural Resources, said, "These are extremely challenging times in the U.S. coal industry, with softness in both the thermal and now the metallurgical coal markets and the pace at which the fundamentals changed. Alpha has taken decisive actions to ensure that our business is both well-suited to today's demand environment and efficient enough to provide us with the flexibility to ramp-up our world-class asset base once market conditions improve."
Crutchfield noted that while the company has reduced its overhead expenses, it will continue to evaluate market conditions and make further adjustments if market conditions warrant.
Alpha's coal revenues for the second quarter rose 11 percent from last year to $1.57 billion, primarily driven by a 40 percent increase in Eastern thermal coal revenue due to the inclusion of a full quarter of legacy Massey operations. This more than offset a 7 percent decrease in revenues from metallurgical coal and production cutbacks implemented in the first half of 2012.
Alpha sold 26.8 million tons of coal in the quarter, up 17 percent from last year. However, average realized price per ton sold declined 5 percent from the year-ago period to $58.41.
Alpha Natural Resources' second-quarter net loss was $2.23 billion or $10.14 per share, wider than loss of $50.07 million or $0.32 per share in the year-ago period.
The latest quarter's results include goodwill impairment charges of $1.5 billion, primarily associated with current market conditions and the continued optimization of the company's Eastern operations which included reductions in operating levels and idling of several operations.
The results also include asset impairment and restructuring charges of $1 billion, reflecting the current coal market conditions, and lower expected production and shipment levels.
Excluding these and other items, adjusted net loss for the quarter was $72.28 million or $0.33 per share, compared to adjusted net income of $152.25 million or $0.97 per share in the year-ago period.
On average, 26 analysts polled by Thomson Reuters expected the company to report loss per share of $0.33 for the quarter. Analysts' estimates typically exclude one-time items.
Total revenues for the quarter grew 16 percent to $1.85 billion from $1.60 billion in the year-ago quarter, which included one month of legacy Massey operations. Analysts had a consensus revenue estimate of $1.78 billion.
For fiscal 2012, Alpha now projects total shipment volumes of 100 million to 115 million tons, compared to the prior range of 100 million to 116 million tons.
ANR is trading at $6.40, down $0.50 or 7.21 percent on a volume of 16.56 million shares.
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