Historical Stock Chart
5 Years : From Jan 2013 to Jan 2018
Massey Energy Co. (MEE) executives expect costs to remain higher, continuing a trend that pushed the miner to a first-quarter loss even as higher prices, production and shipments led to stronger-than-forecast revenue.
During the first quarter, the company took $12.4 million in charges related to a 2010 explosion at its Upper Big Branch mine in Montcoal, W.Va., that killed 29 workers. At the same time, average cash costs per ton jumped 19% to $66.04 from $55.38 a year ago because of lower than planned production, increased costs for mining supplies and labor.
"The labor market for skilled underground miners remains tight," Chief Operating Officer Christopher Adkins said in a conference call discussing the company's first quarter results. Massey has raised pay to keep key employees, he said.
Executives expect costs will continue to rise, and they revised the company's 2011 estimates for cash costs per ton to $64-$67 from $59-$62.
The higher costs led to Massey's first quarter loss of $7.7 million, or 7 cents a share, compared with a year-ago profit of $33.6 million, or 39 cents a share. Revenue climbed 38%, to $949.8 million.
Analysts surveyed by Thomson Reuters expected a profit of 58 cents on revenue of $907 million.
Shares were recently down 4.4% at $64.56.
Higher prices helped goose revenue as demand for steelmaking coal remains sky high amid emerging market consumption outpacing constrained supply.
Massey's first quarter metallurgical coal prices jumped 53% and exports were up 10%, although total shipments declined about 4% because of lost production from the Upper Big Branch mine.
"Export shipments are particularly strong," Massey Chief Executive Baxter F. Phillips Jr. said on the conference call.
Prices for coal burned by power plants rose 12% while shipments of utility coal jumped 37%.
Management revised upward 2011 estimates of average price per ton to $83-$86 from $81-$86. Executives expect to ship 41 million-44 million tons, down from previous guidance of 43 million-47 million tons.
During the first quarter, average produced coal revenue per ton was an all-time high $80.96, a 20% increase, while produced tons sold jumped 21% to 10.3 million.
The first quarter's results will likely be one of the last issued by Massey as an independent company, which reached a $7.1 billion cash-and-stock deal in January to be acquired by Alpha Natural Resources Inc. (ANR). The company--which operates mines in West Virginia, Virginia and Kentucky--has been hurt by reduced production and increased costs because of tougher mine-safety standards.
Massey's longtime chairman and chief executive, Don Blankenship, retired at the end of last year, paving the way for Massey to agree to sell itself to Alpha Natural.
Massey and Alpha Natural intend to hold their respective stockholder meetings to seek approval of the merger on June 1, Massey said Monday. If approved, the companies expect to close the merger promptly after the meetings.
-By Matt Whittaker, Dow Jones Newswires; 212-416-2139; email@example.com
--John Kell contributed to this article.