Western Coal Corp. (WTN.TO,WTN.L), a producer of metallurgical and thermal coal, Tuesday, reported a sharp drop in net income for the third quarter, hurt primarily by decrease lower sales volumes and a fall in prices, amid the economic downturn.
For the third quarter, net income dropped to C$24.03 million or C$0.09 per share from C$62.48 million or C$0.29 per share in the prior-year period, reflecting a substantial fall in net income from mining operations to C$37.75 million from C$94.15 million.
The Vancouver, British Columbia-based company's third-quarter revenues dropped 33% to C$118.66 million from C$176.56 million last year resulting from the decrease in sales price as well as a lower sales volume.
Revenue from Canadian operations for the quarter declined to C$83.78 million from C$176.56 million last year. Revenue from US operations was C$29.82 million, UK operations recorded a revenue of C$4.08 million and revenue from AGD Mining Pty Ltd. was C$0.98 million.
The company attributed the decrease in sales price to the lower coal contract prices for fiscal 2010, which are US$126 per tonne for hard coking coal and US$90 per tonne for ultra-low volatile PCI compared to US$300 per tonne and US$248 per tonne respectively for fiscal 2009.
"We have come out of the global economic recession with a lower and improved cost structure, which combined with the increasing demand for the Company's products and higher coal prices into the future, means Western is well positioned to generate higher shareholder returns," said Keith Calder, President and Chief Executive Officer.
For the quarter, general and administration costs increased 117%, reflecting the cost of acquisition of Cambrian group in July and increase in stock based compensation.
For the first nine months, net income fell sharply to C$29.60 million or C$0.13 per share from C$166.93 million or C$0.84 per share in the year-ago-period. Revenue for the period declined to C$302.00 million from C$ 474.41 million last year.
WTN.L last traded on the London Stock Exchange at 197.58 pence, while WTN.TO closed Monday's trading at C$3.15 on the Toronto Stock Exchange.
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