The Virginia-based company’s net earnings in the period were $US74.3 million on revenue of $732.2 million, an increase from the second quarter of last year when it earned $4.7 million on revenue of $435.3 million.
Coal revenues during the quarter were $631.9 million.
“Persistently strong demand for metallurgical coal from steel producers worldwide is having a profound impact on our financial performance," said company chairman Michael Quillen.
He said Alpha shipped almost a million tons more in the last quarter than in the same period one year ago, and its seaborne shipments are also up 51%.
“With demand growing markedly from countries that are addressing their infrastructure needs, we expect some tightness in the market will continue for a period of time,” Quillen said.
President Kevin Crutchfield added: “Alpha was already established as the largest US exporter of high-quality metallurgical coals before this surge in 2008, and having 21 million tons of our planned metallurgical coal production open for contracting and pricing for the next two years puts us in an extremely good position looking forward."
Alpha said its coal margins per ton were up a staggering 130% in the quarter just ended, brought to a new high of $21.85 due to its higher-margin metallurgical product shipments, which were 44% of its total versus 37% last year at the same time. The company's average realised price per ton also reached a new quarterly high at $81.48.
Its tons produced and processed totalled 6.2Mt for the period, which was level period over period with last year and 1% higher than the first quarter of 2008.
The company purchased an additional 1.5Mt of coal to meet the higher customer demand, which was higher than both 2007’s second quarter and the initial period of 2008.
Total coal sales volumes for Alpha were 7.8Mt, a jump of 13% year over year as well as sequentially. The average cost per ton was up 27% over the quarter, and 13% sequentially, due to an increase in sales-related costs and higher supply costs.
Alpha officials also touched on the recent announcement that it had signed a definitive merger agreement with Cleveland-Cliffs, which will acquire all of its outstanding shares in a transaction of stock and cash.
The combined entity will be called Cliffs Natural Resources and is set to become one of the nation’s largest mining companies with nine iron ore facilities and more than 60 coal mines in North America, South America and Australia in its portfolio.
Looking ahead, Alpha said the global demand for metallurgical coal played a role in its second-quarter decision to commit and price a “considerable amount” of its expected production for the remainder of the year through the middle of 2009. It priced 3.1Mt in the period for delivery that averaged more than $250/t realised at the mine.
“As of July 23, 2008, the company had approximately 10 million tons of planned metallurgical coal production uncommitted and unpriced for calendar year 2009, and in excess of 11 million tons for 2010,” the company said.
“Combined, this represents 83 percent of Alpha's planned metallurgical coal production for the two-year period, and excludes any third-party purchases that are blended and/or resold.”
Of its thermal production expected in 2009 and 2010, 39% (11Mt) remains uncommitted and unpriced. About 2.7Mt was committed during the second period for delivery this year and next at a weighted average of more than $102/t.
