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Released August 02, 2013 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading metallurgical coal producer Walter Energy Incorporated (NYSE:WLT) (Birmingham, Alabama) saw a sharp decline in revenues and profits in the second quarter of 2013, as a difficult global environment for metallurgical (or "met") coal resulted in weakened pricing and lower sales volumes. The company reported a net loss of $34.5 million, compared with income of $31.94 million in the second quarter of 2012.
Total revenues stood at $441.5 million, a 34.84% decrease from the same period last year. During the quarter, met coal production increased nearly 10%, partly due to improved performance at Walter Energy's premium HCC mines in Alabama. The cash cost of production for met coal also benefited from productivity gains, declining more than 23%. But these positive factors were more than offset by a weak global met coal market, as average met coal sales prices per ton fell more than 22% from second-quarter 2012.
Vessel delays at the Port of Ridley in British Columbia had a detrimental impact on shipments during the quarter, as more than 200,000 metric tons had to be moved to the third quarter. Walter Energy also incurred $3.3 million in charges that were attributed largely to proxy consent expenses. Still, the company benefited from a sharp reduction in selling general and administrative expenses, as well as a $3.4 million restructuring and asset impairment net benefit.
Capital expenditures were reported to be $46.22 million for the quarter, compared with $125.21 million for second-quarter 2012, and $80.25 million for the year to date, compared with $246.06 million for the same period in 2012.
Industrial Info is tracking more than $1.3 billion in active projects involving Walter Energy, including a $50 million addition to the Wolverine/Perry Creek metallurgical coal mine in Tumbler Ridge, British Columbia. The project involves excavating and adding equipment to construct an 800,000-ton-per-year surface satellite coal mine to increase overall production from 3 million to about 4 million tons per year. The mine will produce an average 833,333 tons per year for about six years. Coal will be transported to the Wolverine Preparation Plant for processing. The project is expected to be completed in the final quarter of 2013.
"Met coal production totaled 2.9 million metric tons for the quarter, up 7% from the first quarter," said Walt Scheller, the chief executive officer of Walter Energy, in a conference call. "Of this total, 2.5 million tons were hard coking coal, with the remaining roughly 400,000 tons being our PCI [pulverized] product."
Because of a scheduled longwall move in Walter Energy's underground mines in Alabama, volumes in the third quarter are expected to be lower than those of the second quarter. The Wolverine/Perry Creek mine is also moving into a low-output phase of its mining cycle, which will cut results from the Canadian business. Nonetheless, production is expected to remain strong in other areas, and Walter Energy executives say the company is on track to meet its full-year 2013 met coal production target of about 11 million metric tons.
"As we look at the market, we continue to see the short-term outlook for hard coking coal pricing under pressure," Scheller said in the conference call. "We're being confronted with low operating levels at most steel mills; oversupply of hard coking coal in the market; and an exchange rate that is favoring Australian supply."
He added: "As we moved into this quarter, we began to see production cutbacks announced from Mozambique, Russia, the U.S., and to a lesser degree, Australia. Australia does currently to benefit from the favorable exchange rate. Asia continues to drive the world economic climate, with China remaining in the lead."
For more information, visit Industrial Info's North American Metals and Minerals Project Database.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Total revenues stood at $441.5 million, a 34.84% decrease from the same period last year. During the quarter, met coal production increased nearly 10%, partly due to improved performance at Walter Energy's premium HCC mines in Alabama. The cash cost of production for met coal also benefited from productivity gains, declining more than 23%. But these positive factors were more than offset by a weak global met coal market, as average met coal sales prices per ton fell more than 22% from second-quarter 2012.
Vessel delays at the Port of Ridley in British Columbia had a detrimental impact on shipments during the quarter, as more than 200,000 metric tons had to be moved to the third quarter. Walter Energy also incurred $3.3 million in charges that were attributed largely to proxy consent expenses. Still, the company benefited from a sharp reduction in selling general and administrative expenses, as well as a $3.4 million restructuring and asset impairment net benefit.
Capital expenditures were reported to be $46.22 million for the quarter, compared with $125.21 million for second-quarter 2012, and $80.25 million for the year to date, compared with $246.06 million for the same period in 2012.
Industrial Info is tracking more than $1.3 billion in active projects involving Walter Energy, including a $50 million addition to the Wolverine/Perry Creek metallurgical coal mine in Tumbler Ridge, British Columbia. The project involves excavating and adding equipment to construct an 800,000-ton-per-year surface satellite coal mine to increase overall production from 3 million to about 4 million tons per year. The mine will produce an average 833,333 tons per year for about six years. Coal will be transported to the Wolverine Preparation Plant for processing. The project is expected to be completed in the final quarter of 2013.
"Met coal production totaled 2.9 million metric tons for the quarter, up 7% from the first quarter," said Walt Scheller, the chief executive officer of Walter Energy, in a conference call. "Of this total, 2.5 million tons were hard coking coal, with the remaining roughly 400,000 tons being our PCI [pulverized] product."
Because of a scheduled longwall move in Walter Energy's underground mines in Alabama, volumes in the third quarter are expected to be lower than those of the second quarter. The Wolverine/Perry Creek mine is also moving into a low-output phase of its mining cycle, which will cut results from the Canadian business. Nonetheless, production is expected to remain strong in other areas, and Walter Energy executives say the company is on track to meet its full-year 2013 met coal production target of about 11 million metric tons.
"As we look at the market, we continue to see the short-term outlook for hard coking coal pricing under pressure," Scheller said in the conference call. "We're being confronted with low operating levels at most steel mills; oversupply of hard coking coal in the market; and an exchange rate that is favoring Australian supply."
He added: "As we moved into this quarter, we began to see production cutbacks announced from Mozambique, Russia, the U.S., and to a lesser degree, Australia. Australia does currently to benefit from the favorable exchange rate. Asia continues to drive the world economic climate, with China remaining in the lead."
For more information, visit Industrial Info's North American Metals and Minerals Project Database.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
