Coal producer
Alpha Natural Resources
(
ANR
) reported a loss of 33 cents per share for the second quarter of
2012, wider than the Zacks Consensus Estimate of a loss of 30
cents. The results of the company were markedly lower than the
year-ago earnings of 97 cents per share.
GAAP loss during the quarter was $10.14 per share versus a loss
of 32 cents per share reported in the year-ago quarter.
Total Revenue
Alpha Natural Resource's total revenue of $1,848.1 million in
the second quarter was ahead of the Zacks Consensus Estimate of
$1,798 million. The top line was also higher than the year-ago
figure of $1,598 million, reflecting growth of 15.6%.
Operational Update
During the reported quarter, the company expanded its total
volume of coal sold. The company sold 26.8 million tons registering
year-over-year growth of 16.3%. However, the average realized price
per ton of coal during the quarter decreased by $2.81.
Total cost and expenses of the company in the reported quarter
were $4.5 billion versus $1.6 billion in the year-ago quarter. The
increase in cost was mainly due to asset impairment and goodwill
impairment of a cumulative $2.5 billion.
During the quarter the company reported an operating loss of
$2.6 billion, wider than a loss of $0.025 billion in the year-ago
quarter. The downcast in bottom-line results is mainly a function
of spiraling expenses.
Financial Update
Cash and cash equivalents of the company as of June 30, 2012
were $252.2 million versus $585.9 million as of December 31,
2011.
Long-term debt as of June 30, 2012, was $2.91 billion almost
flat with $2.92 billion as of December 31, 2011.
Capital expenditure during the first half of 2012 was $245.2
million compared with $172.7 million in the comparable period, the
prior year.
Cash from the operating activities during the first half of 2012
was $135.4 million versus $294.9 million in the prior-year
period.
Guidance
The company now expects its 2012 coal shipment to be in the
range of 100-115 million tons versus its previous range of 100-116
million tons.
Given the softness in coal demand and an expected reduction in
capital purchases and leasing of selected items, the company has
again reduced its 2012 capital expenditure guidance to a range of
$450 million to $600 million, from the prior range of $450 million
to $650 million.
Peer Comparison
Alpha Natural Resources Inc.'s peer
Arch Coal Inc.
(
ACI
) reported pro forma loss of 10 cents per share in second quarter
2012, in contrast to earnings of 44 cents per share in the year-ago
comparable period. This decline was primarily due to lower sales
volume related to decline in shipments from Powder River Basin
("PRB") operations. The reported loss was, however, narrower than
the Zacks Consensus Estimate of a loss of 18 cents per share.
Arch's total revenue in the reported quarter was $1,063.5
million, up 8% from $985.5 million in the year-ago quarter.
Quarterly revenue surpassed the Zacks Consensus Estimate of $1,020
million.
Our View
During the reported quarter, the company decided to lower coal
production from its northern and southern Kentucky business units.
The decision is in sync with the announcement made by the company
during its first quarter earnings call. Alpha Natural Resources
announced its intention to lower coal production for 2012, taking
into account declining thermal coal demand and increasing
competition from natural gas owing to falling prices.
However, a recovery in natural gas prices and a warmer summer
will turn around demand for coal. We believe coal stockpiles at
power generating plants have also diminished enough to reinvigorate
coal demand. These factors are sure to aid coal miners and
operators.
Based in Abingdon, Virginia, Alpha Natural Resources Inc. along
with its subsidiaries engages in the production and selling of
steam and metallurgical coal in the United States. The company was
founded on 2002 and has 14,000 full time employees.
ARCH COAL INC (ACI): Free Stock Analysis Report
ALPHA NATRL RES (ANR): Free Stock Analysis
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