Q2 losses drag Alpha Natural Resources, Inc (NYSE:ANR) down to near-alpha stages
On Friday, Alpha Natural Resources, Inc (NYSE:ANR) posted losses even as the diminishing demand for coal dragged prices and profits through the mire. A year ago, the company had a $6.57 margin for every ton of coal it sold. In the last quarter this had dipped to $2.72. There was a drop of 19% in the amount of coal that the company sold, to 21.6M tons.
Alpha shares dropped 8% and other coal miners came crashing down as well. The company’s declining volume and margins drove the revenue down by almost 28% to $1.34B from the $1.85B that it stood at a year earlier. The company lost $185.7M or 84 cents/share in the quarter that ended 30 June. A year ago, the company lost $2.23B or $10.14/share as it had written down the value of its assets. ANR also took restructuring charges in the range of $2.5B.
The mine shutdown
The company’s most recent loss has grown to $129M or 59 cents/share (excluding one-time items in both the quarters), from $72M or 33 cents/share that it stood at a year ago. The average analysts’ projection had been a loss of 34 cents/share on$1.85B revenue. Apart from the pricing pressure, ANR had a totally unexpected downtime at the Cumberland mine. There were also some unfavorable mining conditions at the company’s Emerald mine.
Both these occurrences singed the production as well as shipment of high-margin coal. On 15 July, ANR announced that the Cumberland mine has been shut down as the roof of a main segment of the mine was under repair. Kevin Crutchfield, the chairman and CEO said that the company is idling its unprofitable coal-capacity for the coal that is used for steelmaking and heating. The inventory of coal at the United States utilities is dipping and this will eventually lead to a rise in the demand, in the future.