Coal producer Alpha Natural Resources Inc. said Thursday it lost $56.4 million in the second quarter after booking charges related to its acquisition of rival Massey Energy and expenses from the deadly explosion at Massey's Upper Big Branch mine in West Virginia.
The Abingdon, Va., company's loss amounted to 36 cents per share. In the year-ago quarter, Alpha earned $38.8 million, or 32 cents per share.
Its shares fell $5.07, or about 12.7 percent, to $35.01 in midday trading.
Alpha said expenses related to the June acquisition of Massey totaled $254.4 million and costs tied to the Upper Big Branch explosion in April 2010 were $5.8 million. Excluding those and other special items, adjusted income from continuing operations was $150.6 million, or 96 cents per share, for the quarter. That missed Wall Street expectations of $1.14 per share.
Revenue increased 59.3 percent to $1.59 billion, helped by the addition of Massey operations for the month of June. Wall Street expected $1.38 billion.
Alpha said that coal prices rose 38.4 percent to an average $61.22 per ton in the April-June period. It took advantage of those increases by boosting coal sales 14 percent to 23 million tons.
But the company said the cost of coal sales are being impacted by increases in the per ton cost of purchased coal, higher diesel fuel costs and general inflationary pressures.
Shareholder approval of Alpha's $7.1 billion takeover of Richmond, Va.-based Massey transformed it into the world's third-largest producer of metallurgical coal, a key fuel for manufacturing steel. Alpha has 5 billion tons of coal reserves and more than 180 mines and processing plants in Kentucky, Pennsylvania, Virginia, West Virginia and Wyoming.
Massey's safety record has been the focus of renewed scrutiny since 29 miners died in an explosion at its Upper Big Branch mine in southern West Virginia. The April 5, 2010, tragedy was the deadliest at a U.S. mine since 1970 and remains the subject of ongoing civil and criminal investigations.
The blast wreaked havoc on Massey's business, and it reported four consecutive quarterly losses before Alpha bought it. Massey also struggled with the abrupt retirement of high-profile Chief Executive Don Blankenship, and turnover rates that topped 20 percent at times. Federal regulators cracked down on the company's problem mines. Massey also has a checkered environmental record.
Alpha was quick to absorb Massey, with the goal of running a combined company.
"Safety trends are improving, and the rapid and well received roll-out of our Running Right program is already yielding tangible results," Alpha CEO Kevin Crutchfield said in a news release. "Our ultimate goal is to send each and every one of our 14,000 employees home safely at the end of every day."
Crutchfield told investors in a conference call that "there's still a tremendous amount of work to do" to fully integrate Massey into the company.
While coal demand is "muted" in the U.S. as power plants burn more natural gas, Alpha said global demand will continue to grow. The company expects the world coal market to continue to be driven by demand from China and Japan.
The company estimates it will ship a total of 104 million to 112 million tons of coal in 2011. Alpha also expects to plow between $575 million and $650 million back into the company in the form of capital spending.
AP Energy Writer Chris Kahn in New York contributed to this report.