Coal miner Alpha Natural Resources on Thursday reported a first-quarter loss of $29.1 million due to weak demand for coal and rising costs. It plans to reduce capital spending and further cut production this year in response.
The Bristol, Va. company said the loss amounted to 13 cents per share in the quarter. That compares with a profit of $49.8 million, or 41 cents per share, a year earlier. Revenue increased 71 percent to $1.93 billion, mostly due to last year's acquisition of rival Massey Energy.
Excluding special items, Alpha lost 27 cents per share. Analysts, who typically exclude special items, had expected a loss of 15 cents per share on sales of $1.86 billion, according to FactSet.
Alpha has struggled to generate consistent profits since buying Massey for $7.1 billion in June.
Energy demand has dropped in the United States and Europe. And natural gas is the cheapest in 10 years thanks to a production boom in North America. Utilities, which burn coal to generate electricity, are increasingly switching to natural gas generators to take advantage of the low prices.
From January to March, Alpha sold more coal at higher prices. But production costs also soared, cutting into the company's profit margin. Alpha earned $8.58 for every ton of coal it sold in the quarter. That's down 31 percent from the $12.49 it earned per ton in the same period last year.
CEO Kevin Crutchfield said the company is now primarily focused on "pruning our portfolio" and controlling costs.
Alpha will cut production beyond the reductions announced earlier this year. It plans to cut shipments this year for Eastern metallurgical coal, Eastern steam coal and Western steam coal by a combined 7.5 million tons. Alpha is also reducing its capital spending plans for 2012 by $100 million to a range of $450 million to $650 million.
Shares fell by 44 cents, or 2.8 percent, to $15.05 in early trading.