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“Compared with the fourth quarter of 2011, we expect strong production growth but revenue and profitability will be disappointing due to flat sales volume and weaker coal prices experienced across the industry in the first quarter of 2012,” chief executive officer Walt Scheller said.
“We remain confident that production will be within the guidance provided for 2012 and we continue to take steps to optimize production at our highest-margin mines to help offset weakening global metallurgical coal prices.”
In its updated outlook, the company said production would likely range between 2.8 and 2.9 million metric tonnes in the first quarter, which is a rise of 16% to 21% from its fourth-quarter 2011 total of 2.4Mmt.
It held on to its whole-year guidance of 11.5-13Mmt for metallurgical coal production and said it would be made up of about 75% high-margin hard coking coal and 25% pulverized coal injection.
To help meet its margin ratios and respond to market demand, Walter officials confirmed its Maple underground complex in West Virginia would cut production by about 35% in the second quarter.
The producer said the drop would effectively idle the 60,000 metric tons per month high-volatile met mine for about 10 days a month but it would retain most of the mine’s 230 employees for positions at other locations.
“Walter Energy will continue to monitor market demand for high-vol products and may further adjust production to reflect market conditions,” Scheller said.
He said the reduction would be partially offset by a jump in higher-margin HCC output at its other locations in Alabama and Canada.
Officials said its first-quarter met coal sales volumes would hold steady compared to the last period of 2011 at 2.4Mmt, though about 240,000 metric tons of production would be shipped after the beginning of the second quarter due to client preference and shiploading schedules.
Met coal prices, also driven by the wobbly global markets, will also be down in the first quarter.
While prices are expected to average about $220 per metric ton for HCC and $180/mt for low-vol PCI, the projection is a drop of 10% and 15% respectively, versus the last quarter of last year.
