For the June quarter, the Virginia-based company recorded a loss of $US2.23 billion versus a year-on-year loss of $50.1 million.
If a slew of charges including impairment and restructuring charges, expenses related to the Upper Big Branch mine, net amortizations, merger-related expenses and other hits were not included, the producer said it would have posted a much less dramatic adjusted net loss of $72 million.
In last year’s second quarter, the company’s adjusted net income was $152 million.
Alpha's total second quarter revenues were $1.8 billion, up slightly over last year’s comparable quarter of $1.6 billion, the latter of which included one month of legacy Massey operations.
Coal revenues were $1.6 billion, 11% higher than the $1.4 billion reported in 2011. Officials said that was primarily due to a 40% increase in eastern thermal coal revenue from its inclusion of a full quarter of legacy Massey operations into the second quarter’s figures.
Doing that, officials said, more than offset a 7% year-on-year decrease in metallurgical coal revenues and production cutbacks that took place in this year’s first half.
Another key element up in the second quarter was other revenues, freight and handling, which totaled $49.5 million and $233.4 million, respectively, versus $36.3 million and $150.9 million, respectively, in 2011’s second quarter.
Alpha’s shipments in the June period included 10.2 million tons of Powder River Basin steam coal, 11Mt of eastern steam coal and 5.6Mt of metallurgical coal.
The producer enjoyed an increase in average realizations per-ton in the PRB of $12.96 from $11.92, though average realizations per-ton for eastern steam coal shipments slipped to $65.05 from $66.65.
Overall, its average realization for metallurgical coal decreased to $127.83 per ton in the second quarter, compared year-on-year with $176.08.
Capital expenditures were up to $119 million from $116 million in the comparable period last year.
Alpha officials said its investing activities during the period also included $36.1 million for the final annual installment payment on a PRB federal coal lease.
“These are extremely challenging times in the US coal industry, with softness in both the thermal and now the metallurgical coal markets and the pace at which the fundamentals changed,” chairman and chief executive officer Kevin Crutchfield said.
“Alpha has taken decisive actions to ensure that our business is both well-suited to today's demand environment and efficient enough to provide us with the flexibility to ramp-up our world-class asset base once market conditions improve.”
Among those changes, Crutchfield said, were continued optimizations of the company’s central Appalachia operations by making adjustments, idling high-cost thermal and lower-quality metallurgical production and putting a greater focus on higher-margin metallurgical products.
Also, the executive said, Alpha had worked to reduce its overheads.
“Unfortunately, this occurred at a time of heightened and sustained unemployment rates and a very tepid economic recovery in the US,” he said.
“We sincerely regret the impact our production curtailments have had on good employees and their families, but the market environment with which we are faced left us no other options. We will continue to evaluate market conditions and will make further adjustments if market conditions warrant.”
Crutchfield praised the Alpha workforce, and its dedication to its Running Right program for its improvements in safety and compliance even during market uncertainty and a “regulatory environment that threatens the long-term competitive position of America”
“During the second quarter, Alpha's overall incident rate improved 13 per cent compared with the first quarter of 2012, and our legacy Massey operations improved 9 per cent from the prior quarter and a remarkable 39 per cent since the third quarter of 2011, the first full quarter following our acquisition of Massey,” Crutchfield said.
“Seven of our Virginia operations were recognized by the Virginia Coal Mine Safety Board and Department of Mines, Minerals and Energy for their outstanding safety performance, and four of our West Virginia operations received 2011 Joseph A Holmes Safety Association awards during the quarter.”
Looking ahead whole-year, Alpha is anticipating total shipment volumes of 100 to 115Mt, made up of 20 to 23Mt Eastern metallurgical coal, 38 to 44Mt of Eastern steam coal and 42 to 48Mt of Western steam coal.
Alpha priced 2.4Mt of metallurgical coal in the second quarter for 2012 delivery at average realization of about $105 per ton.
As of July 18, based on the producer’s guidance midpoint, 86% of its eastern metallurgical coal shipment volume was committed and priced for the year at an average $136.06/t, and 10% was committed and unpriced.
Its 2012 eastern steam coal shipment volume is 100% committed and priced at $66.22/t average, and all of its Western steam coal shipment volume is now committed and priced for 2012 at $12.89.
“Due to expected reductions in capital purchases and leasing of selected items, Alpha has again reduced its anticipated 2012 capital expenditures to a range of $450 million to $600 million, compared with the prior range of $450 million to $650 million.”
