For the fourth quarter Patriot reported revenue of $US541 million and a net income of $65.2 million, both well ahead of the 2007 fourth quarter when the company had $254.2 million in revenue and a net loss of $57.7 million.
The full-year report was similarly up, with revenues of $1.7 billion and net income of $146.9 million compared, year-over-year, to $1.1 billion in revenue and a net loss of $122.5 million.
“In 2008, coal markets experienced record-high prices mid-year, followed by an economy-driven downturn by year-end,” said Patriot chief executive officer Richard Whiting.
“While these unprecedented swings were occurring in the coal markets, we completed our acquisition of Magnum, and made significant progress in realising synergies and integrating the companies.”
Officials said the company was able to quickly react to demand changes and refine production at its mines to keep cost competitiveness.
“We have implemented a specific management action plan that included key decisions to close high-cost mines, cut capital expenditures, transfer equipment to more productive locations, reduce the prices we pay for materials and supplies, and fill open positions with displaced miners from idled operations.”
Patriot did have its obstacles in the final quarter, including an 800,000t shortfall of production due to difficult conditions at its Federal and Panther longwall mines. Going into the new year, it opted to idle its Jupiter, Remington and Black Oak complexes as well as its Rocklick preparation plant.
Officials commented on the latest conditions at Federal and Panther: “Production … remained at reduced levels in the fourth quarter as we continued to experience sandstone intrusions in both mines.
“While difficult geology at Federal continued through January, production has now improved, and we expect normal mining conditions by the end of February.”
At Panther, he added, crews expect to see “good mining conditions” by the first portion of March and in the meantime it has upgraded Panther’s shearer to improve reliability.
“We have [also] adjusted future panels at both longwall mines to minimise the impact of difficult geology," Whiting said.
Despite the shortfall, the producer reported 7.4 million tons thermal and 2Mt metallurgical coal were sold in the last quarter, a 4.3% rise over the prior year thanks to thermal coal sales from the new Magnum mines in central Appalachia. Its metallurgical coal sales, it noted, were impacted in the final financial period by customer deferrals and delivery cancellations that the company called unexpected.
For the year, tons sold totalled 28.5Mt, up notably from 22.1Mt in 2007. Patriot cited the contributions of Magnum’s operations after its July 2008 acquisition date for the higher volumes.
Looking forward into the year, Patriot expects sales volumes to be between 36Mt and 28Mt with a cost per ton in the range of $56 to $59 for Appalachia and $35 to $37 in the Illinois Basin.
As of the last day of 2008, 2009 unpriced coal was estimated at 2Mt metallurgical and 1Mt thermal. Looking at anticipated 2010 volumes, Patriot believes 7Mt met and 12Mt thermal are still unpriced.
“We believe we have great potential to prosper as the world economy and coal markets regain strength,” said Whiting.
“We look forward to delivering to our stakeholders the bottom-line benefits of the Magnum acquisition and our new strategic initiatives.”
