Massey reports $7.7M first-quarter loss

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Posted: May 02, 2011 6:57 PM
Massey reports $7.7M first-quarter loss

Massey Energy Co. said Monday that it had another money-losing quarter as it struggled to recover from a 2010 explosion that killed 29 miners in West Virginia.

Massey said it lost $7.7 million, or 7 cents per share, in the first three months of 2011, including charges. Massey earned $33.6 million, or 39 cents per share, in first-quarter of 2010.

Revenue rose to $949.8 million, compared with $688.6 million in the year-ago quarter. The latest results include Cumberland Resources, a company acquired in 2010.

Massey's own pending acquisition, a $7.1 billion takeover by Alpha Natural Resources, is scheduled to close after shareholders vote June 1.

Massey started losing money in the second quarter of 2010, which started with the deadly April 5, 2010, explosion at its Upper Big Branch mine in West Virginia's southern coalfields. The disaster remains the target of criminal and civil investigations.

The first-quarter results included $12.4 million in charges related to the Upper Big Branch explosion. Massey also recorded $18.4 million in losses on derivative instruments and $5.4 million in transaction costs related to the Alpha deal.

Chief Executive Baxter Phillips said the company made progress.

"We recognize that a lot of work remains to bring costs in line to improve net profitability," he said in a statement. "We believe our operations can achieve cost improvements."

Costs climbed to $934.3 million in the first quarter, from $621.8 million in the same period of last year.

Massey shipped 4 percent less metallurgical coal for steelmakers in the first quarter, which the company blamed on lost production from Upper Big Branch. The dip came at a bad time: Massey said prices for metallurgical coal rose more than 53 percent from first-quarter 2010.

Phillips said the company hopes to take advantage of the strong international demand driving metallurgical coal prices as high as $300 a ton.

"We expect to shift 2 to 3 million tons of Cumberland production into the metallurgical market in 2011," he said. "Our increased production plans and expanded port and barge capacity will enable us to ship more coal to meet the demands of our customers."

The company said it now expects to ship between 41 and 44 million tons in 2011, down from an earlier range of 43 to 47 million tons. Massey said average prices should range from $83 to $86 a ton, up from $81 to $86. Massey now predicts cost of $64 to $67 per ton, up from $59 to $62.