Coal miner Massey Energy swings to 3Q loss

AP News
Posted: Oct 26, 2010 5:58 PM
Coal miner Massey Energy swings to 3Q loss

Coal company Massey Energy Co. said Tuesday that it lost money in third quarter because of tougher federal regulations after a deadly mine blast hurt production.

Massey lost $41.4 million, or 41 cents per share, compared with net income of $16.5 million, or 19 cents per share, in the same quarter last year.

The latest results included another charge related to the deadly explosion at its Upper Big Branch mine; this time $14.5 million. Without the charge, the company said it would have lost 33 cents per share.

Analysts expected Massey to lose 18 cents per share, not counting items such as the charge.

Massey also reduced its estimate of coal shipments for this year and 2011, citing the difficulty of running some mines under new regulatory requirements. In September, Massey estimated 2010 shipments would be 39 million tons. The new forecast is 38.5 million tons. Next year's outlook dropped from a range of 45 million to 51 million tons, to a range of 43 million to 47 million tons.

The forecast average price per ton for this year fell from $71 to $70.50.

Massey shares fell 72 cents to close at $40.45 in regular trading. They dropped $1.05, or 2.6 percent, to $39.40 in extended trading after the results were released.

CEO Don Blankenship said the company lost shifts and productivity because of tougher enforcement by federal mining regulators.

"Our operations struggled during the quarter and we are clearly disappointed with the results," Blankenship said. He vowed a "refocused" effort on operations and improving productivity.

The company has been under criminal and civil investigations since an April explosion at its Upper Big Branch mine in West Virginia killed 29 miners. It was the deadliest accident in a U.S. coal mine since 1970.

Massey's Revolution mine in West Virginia was shut down in June, and the company has been waiting for federal approval of a new ventilation plan.

Despite the setbacks, Massey produced more coal and generated higher revenue than a year ago _ $810.2 million last quarter, compared with $641.6 million in the third quarter of 2009. Revenue per ton improved due to higher prices on coal used to generate power and make steel.

The cash cost for producing a ton of steel rose to $62.50 from less than $50 a year ago. The company blamed lower productivity due to mine shutdowns, higher labor turnover, and pay increases for mining jobs.