Alpha Natural Resources posted a fourth-quarter loss Friday after booking $745 million in charges due to weak demand for coal and also new environmental regulations.
Losses amounted to $733 million, or $3.34 per share, for the final three months of 2011, compared with a profit of $10.8 million, or 9 cents per share, in the same part of 2010. Revenue more than doubled to $2.07 billion.
Excluding the goodwill impairment charge and other special items, Alpha says its adjusted losses were $16 million, or 7 cents per share, in the quarter.
Wall Street had been expecting a profit of 27 cents per share on revenue of $2.16 billion, according to FactSet.
Alpha sold coal in the fourth quarter at prices that were an average of 46 percent higher than the previous year, and shipments increased by 41 percent. Yet that was partially offset by the cost of producing and shipping.
Coal used in steel making and power generation, is becoming less attractive in the wake of tough new emissions regulations like the EPA's Cross-state Air Pollution Rule. CSPAR has been delayed by a federal appeals court ruling, yet Alpha said it's already pushing utilities to buy less coal and, in some cases, close down coal-fired power generators altogether.
At the same time that regulations are tightening, natural gas prices have plunged, giving utilities a cheap alternative to coal.
Alpha announced earlier this month that it would suspend operations at four mines in Kentucky and West Virginia and reduce production elsewhere. It also plans to idle two other mines by early 2013. Other coal producers are taking similar actions.
CEO Kevin Crutchfield said the cutbacks will reduce coal shipments by about 4 million tons in 2012.
"This decision, which affects several hundred employees in Kentucky and West Virginia, was not made lightly," Crutchfield said. "A variety of market conditions, including competition from natural gas which recently hit decade low prices, regulatory-driven plant retirements, unusually mild winter weather, and weak demand for certain coal products, all led to the conclusion that these actions were necessary."
Alpha cut its forecast for coal shipments this year to between 20-25 million tons of Eastern metallurgical coal, down from a previous expectation of 23.5-26.5 million tons. It also expects to ship between 42-48 million tons of Eastern steam coal, down from a previous expectation of 46-52 million tons.
For the full year, Alpha lost $677.4 million, or $3.76 per share, compared with a profit of $95.6 million, or 79 cents per share, in 2010. Annual revenue increased 81.5 percent to $7.1 billion.
Shares of Alpha Natural Resources Inc., based in Abingdon, Va., fell 62 cents, or 3.1 percent, to $19.20 in premarket trading.
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