Reuters: Hot Stocks: UPDATE 2-James River Coal cuts costs to blunt impact of low prices

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UPDATE 2-James River Coal cuts costs to blunt impact of low prices Aug 9th 2013, 13:50 Fri Aug 9, 2013 9:50am EDT * Revenue falls 42 pct to $160.1 mln * Coal shipments down 26 pct to 2.16 mln tons * Price per ton declines 22 pct * Adjusted loss per share $1.04 vs est. $1.33 * Shares rise 7 percent (Adds analyst comment) Aug 9 (Reuters) - James River Coal Co reported a smaller-than-expected quarterly loss as cost cutting made up for a sharp decline in coal prices and shipments. The company's stock rose as much as 7 percent to $1.91 on Friday morning on the New York Stock Exchange. Costs at James River Coal declined 36 percent in the second quarter. Total coal shipments fell 26 percent to 2.16 million tons in the second quarter while price per ton declined 22 percent to $69.72. James River Coal sells both metallurgical coal used to make steel and thermal coal used to generate electricity. Tudor, Pickering, Holt & Co analysts viewed the company's low cash burn in the quarter as a positive. James River Coal's available liquidity rose slightly to $108.8 million as of June 30 from $107.2 million as of March 31. The company's liquidity has been a cause of concern, with analysts warning that its cash balance will last no longer than three to four quarters unless coal markets improve. Coal miners are being hurt by weak demand for both steel-making and thermal coal. James River Coal warned of prolonged weakness in the metallurgical coal market. A slowdown in growth in China, along with oversupply, is weighing on demand for coal used in steel production. "The (metallurgical coal) markets have clearly weakened during the past several months," Chief Executive Peter Socha said in a statement. "We are a little more cautious about met than we had been earlier this year." James River Coal is being hurt also by lower demand for thermal coal as U.S. utilities switch to cheaper natural gas to fuel power plants. The threat of regulation that could discourage use of coal - such as President Barack Obama's plan to craft new carbon emission rules for thousands of power plants - is also weighing on the U.S. thermal coal industry. James River Coal, however, said that thermal coal markets could improve later this year and into 2014. U.S. coal miners, including Alpha Natural Resources Inc , Arch Coal Inc and Peabody Energy Corp, reported bigger losses in the quarter ended June due to weak prices. James River Coal's revenue fell 42 percent to $160.1 million in the three months. Adjusted loss was $1.04 per share, below the average analysts' estimate of $1.33 per share, according to Thomson Reuters I/B/E/S. A $101.2 million pretax gain helped James River Coal post a net profit of $52.6 million, or $1.16 per share, compared with a loss of $25.8 million, or 74 cents per share, a year earlier. The pretax gain was because the company swapped debt due in 2015 for notes maturing in 2018. (Reporting by Swetha Gopinath in Bangalore; Editing by Sriraj Kalluvila and Kirti Pandey) Link this Share this Digg this Email Reprints

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