For the fourth quarter ended December 31, the Oklahoma-based company’s revenue rose 13.4% to $US474.6 million on higher sales and increased average prices, while net income increased 5% to $91.7 million.
Revenues whole-year were $1.8 billion, a 14.5% jump year-on-year, again driven mostly by volumes and price realizations from Alliance’s strong sales contract position. Net income rose 21.3% to $389.4 million.
Alliance saw higher sales tonnage from the River View operation and also returned its Pattiki mine to full production in 2011, both helping its bottom line. At the same time, an expansion of coal brokerage activities resulted in higher volumes for tons sold – up 5.4% to 31.9 million tons – as well as a 6.6% rise in tons produced to 30.8Mt.
The improved pricing under its sales contracts and export market sales increases worked combined to create a 9.3% rise in average coal sales prices in 2011 to $55.95/t sold versus $51.21/t in 2010.
“Looking ahead, we remain encouraged that our strategy of expanding ARLP’s presence as a low cost operator in the growing Illinois Basin and Northern Appalachia coal markets will create opportunities for continued growth in the future,” president and chief executive officer Joseph Craft III said.
He also said that Alliance has focused on making 2012 another year for record financials, and it has a plan in place to achieve it.
“The keys for ARLP to achieve this goal are to have a successful start up of the Tunnel Ridge longwall operation and for our customers to take delivery of their contracted tonnage,” he said.
He also said the company was in a solid position with substantially all of its production for the year, and a substantial portion of anticipated 2013 production, committed and priced under contract.
“The current sluggish coal markets – caused by low natural gas prices, mild weather patterns, ongoing regulatory burdens, weaker export demand and aggressive reselling of coal previously purchased by traders and utilities – are creating challenges for domestic coal producers,” Craft said.
“ARLP expects these challenges will likely cause other coal operators to reduce production, setting the stage for a rebound in coal prices in the second half of 2012.”
He said Alliance will use the “lull” time to focus on its growth efforts at Tunnel Ridge as well as the Gibson South and White Oak complexes and focus on cost control company-wide.
“Our long term view of the supply/demand fundamentals in the Illinois Basin and Northern Appalachian regions continues to be positive, and we remain committed to ARLP’s strategic efforts to expand in these growing markets."
The company is currently anticipating whole-year 2012 production to range between 34 and 35Mt. The increase, in part, will come from the addition of two continuous miner units in the Illinois Basin and the start of longwall operations at Tunnel ridge during the second quarter.
