Reuters: Hot Stocks: UPDATE 3-Alpha Natural adjusted loss widens, sees headwinds from shutdown

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UPDATE 3-Alpha Natural adjusted loss widens, sees headwinds from shutdown Aug 2nd 2013, 15:26 Fri Aug 2, 2013 11:26am EDT (Adds in force majeure at Cumberland mine, updates share fall) Aug 2 (Reuters) - Coal miner Alpha Natural Resources Inc reported a wider second-quarter loss before special items as prices fell, and warned that a shutdown at a Pennsylvania mine could weigh on shipments and raise its costs this year. Alpha expects to restart production at the Cumberland underground thermal coal mine in the second half of August, Chief Executive Kevin Crutchfield said on a call with analysts and investors on Friday. The company was forced to stop mining at the site in July so it could fix part of the roof. Crutchfield said Alpha has invoked force majeure, a clause included in many contracts that removes liability for natural and unavoidable events that prevent companies from fulfilling their obligations. Cumberland shipped 6.4 million short tons of coal in 2012, while Alpha's sales totaled 108.8 million tons, but the company said Cumberland usually enjoys relatively high margins. Alpha said it expects the Eastern segment's cost of sales to be between $72 and $76 per ton in 2013, excluding some merger-related and regulatory expenses. It previously forecast $69 to $73. Alpha shares fell 8.1 percent to $5.00 in morning trade on the New York Stock Exchange. TOUGH EXPORT MARKET Alpha also has mines in Virginia, West Virginia, Kentucky and Wyoming. It sells both metallurgical coal, used to make steel, and thermal coal, typically used to produce electricity. Both businesses have been under pressure in recent quarters. A weak global steel market has weighed on metallurgical coal prices, while relatively inexpensive natural gas has hit demand for thermal coal. "The global market for seaborne metallurgical coal remains oversupplied, further pressuring margins," Alpha said in its earnings release. "The market for export steam coal in the Atlantic basin is currently uneconomic for most, if not all, U.S. production." Alpha said that while domestic power producers' inventories are falling, there is still excess supply of Central Appalachian thermal coal and "the threat of oversupply stemming from latent capacity" in the Powder River Basin. PRICES SLIDE In the second quarter, average realized prices fell across Alpha's business segments from a year earlier. The company's net loss narrowed to $185.7 million, or 84 cents a share, from $2.23 billion, $10.14 a share, a year earlier, when the company took about $2.5 billion in impairment and restructuring charges. Excluding one-time items, the company lost 59 cents a share in the latest quarter, in line with analysts' average estimate, according to Thomson Reuters I/B/E/S. Revenue fell to $1.34 billion from $1.85 billion, while analysts were expecting $1.24 billion. (Reporting by Allison Martell in Toronto; Editing by Lisa Von Ahn and John Wallace) Link this Share this Digg this Email Reprints

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