Admittedly, that previous year’s income figure did include gains due to several asset sales and Consol had to deal with the loss of production due to the fire at its Blacksville mine this quarter.
The good news is the company expects things to improve in the third quarter and for the rest of the year.
Lower prices and sales volumes for thermal coal were the primary driver for the lower adjusted earnings in the quarter.
Lower prices for the company’s premium low-vol coal, due to weaker worldwide demand, also contributed to weaker adjusted earnings.
Cash flow from operations in the quarter was $125 million, compared to $138 million in the same quarter last year.
Coal and gas production results were generally in line with previous guidance.
Consol’s energy coal division held the line on costs, posting costs of $51.87 across all tons sold in the second quarter. That is up just 17c per ton on the result for the corresponding 2012 period.
That was achieved despite lower sales volumes in the just gone quarter.
To further manage costs the company has initiated a thorough review of staffing levels and project spending.
“The second quarter was challenging as we incurred the expense associated with the Blacksville mine fire and were not able to realize revenue from the mine’s planned sales,” Consol chairman and CEO Brett Harvey said.
“In addition, during the second quarter we exerted discipline in a weak Asian market, which resulted in overall lower sales volumes and shipments for the rest of the coal segment.
“Looking to the third quarter and remainder of 2013, we see an improving and stronger level of demand for our domestic thermal portfolio.
“The improving picture for thermal coal demand is a cumulative result of the Blacksville outage, outages and idlings at competitor mines, the hot summer weather, higher year-over-year gas prices and announced retirements of less-efficient coal plants outside of our market portfolio that will result in the base-load coal plants that we supply running harder.
“All of these factors bode well for second half 2013 thermal demand in our core region.”
Another thing that could help out this demand growth is the strengthening gas price, which will make thermal coal more cost effective.
The higher gas price will also help Consol’s gas division.
That division’s results were aided by slightly higher production and prices compared to the same quarter one year ago.
A process is in place to evaluate and potentially monetize several assets this year as long as fair value is received for them.
Consol’s liquidity is sitting at $2.2 billion.
Capital investment costs for its BMX mine are now expected to be $710 million. The increase from the prior estimate is due, in part, to a lower sales price for development tons, which increases the dollars being capitalized during the development phase.
