Coal and natural gas producer CONSOL Energy Inc. (CNX), reported a decline in fourth quarter earnings from last, with revenues almost flat with last year. Nevertheless, earnings and revenue for the quarter topped analysts' estimates. Looking ahead, the company said 2010 looks better due to rising economic activity and favorable weather. The company also indicated its sale of coal to Asian markets would bolster its earnings in 2010 and beyond.
Net income attributable to the company's shareholders for the quarter slid to $143.2 million, from $176.3 million in the corresponding period last year. Earnings attributable to the company's shareholders declined to $0.78 per share from $0.97 per share in the same period last year, but came in above the $0.74 per share projected by twenty-two analysts polled by Thomson Reuters. Analysts estimates typically exclude special items.
Results for the prior year period included a gain of $0.20 per share related to a refund for black lung excise tax.
Net income for the quarter declined to $150 million from $186.2 million in the year-ago quarter.
Total quarterly revenue and other income was almost flat at $1.238 billion compared with $1.242 billion in the same period last year, but topped twelve analysts' revenue forecast of $1.17 billion for the quarter.
Thermal coal production for the quarter dropped to 14.6 million tons from 16.2 million tons in the year-ago period. Average price realized per ton for company produced coal rose to $54.17 from from $46.49 in the year-ago quarter.
Metallurgical Coal production decreased to 0.9 million tons from 1.2 million tons a year earlier. Average price realized per ton for company produced coal slid to $108.24 from $123.01 a year earlier.
The company said during the quarter it sold a Panamax vessel of high-vol coking coal from Bailey Mine in Northern Appalachia to merchant coke plants in China. The company also announced that it sold 5 cargoes of Northern Appalachia high-vol coking coal today into Asian markets. CONSOL said the sale of coal into the high-vol coking coal market has meaningful implications for its earnings in 2010 and beyond.
Brett Harvey, president and chief executive officer said, "We also gained momentum in the fourth quarter. Demand for all three of our products is improving, due to rising world-wide economic activity and the recent favorable weather. 2010 looks more promising than I thought possible only three months ago."
For the twelve-month period, net income attributable to CONSOL Energy shareholders was $539.7 million or $2.95 per share, compared to $442.5 million or $2.40 per share last year. Total revenue and other income declined to $4.621 billion from $4.652 billion in the previous year. Street analysts expected the company to earn $2.90 per share on revenue of $4.55 billion for 2009.
The company expects to invest $1 billion in 2010, including $500 million for coal operations, $400 million for CNX Gas, and $100 million for other non-gas activities.
The company expects the recovery likely in 2010 to lead to an increase in demand for its metallurgical coal, thermal coal, and gas businesses The outlook for a gradual economic recovery is also expected to tighten the thermal coal markets and support higher pricing.
CONSOL said higher gas prices in 2010 should result in power generators switching back from gas to coal based on dispatch economics. The company expects up to 30 million tons of coal generation to displace natural gas generation in 2010. In addition, about 19 gigawatts of new coal-fired electricity generation capacity is set to come online by the end of 2012, the company said
CONSOL expects to produce 56 million tons of thermal coal in 2010 to supply domestic customer demand and thermal coal exports. CNX Gas reaffirmed its previously announced production guidance of 100 Bcf for calendar year 2010.
Looking ahead, Harvey said, "2010 is looking better than I thought possible three months ago, due to increased economic activity and much colder-than-normal weather... With its superior portfolio of Appalachian high-Btu thermal coal, both low-vol and high-vol coking coal, and natural gas, I continue to believe that CONSOL Energy will outperform its peers in 2010."
CNX is currently up $0.90 or 1.80% and trades at $49.13.
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