For the quarter ended June 30, Patriot’s net loss was $US12.3 million versus $13.6 million a year ago, and revenue jumped 17% to a record $632.2 million from $539 million.
The higher revenues stemmed from higher selling prices in the June quarter, which were 16% – nearly $11 per ton – higher than the same period last year.
Second quarter sales totaled 8.1 million tons, 6.1Mt of which was thermal and 2Mt of which was metallurgical. In the June 2010 quarter, Patriot sold 6.2Mt thermal and 1.9Mt met for a total sales volume of 6.2Mt.
One red mark on Patriot’s second quarter balance sheet: costs, which were up in both segments for the period as well as the first six months of the fiscal year.
“A number of factors impacted our costs this quarter, including the new metallurgical mines coming online, met tons being a larger portion of our total sales mix, higher sales-related costs, and the idling of the Panther longwall for about two weeks for an equipment component upgrade," the company noted.
"While the richer product mix has pressured our per-ton costs, our focus remains on expanding our bottom line through higher-margin business opportunities."
Patriot president Richard Whiting said the producer was “nearing a major turning point in the life of the company” and said that its enhanced performance in the second quarter exemplified the potential of its operations portfolio as well as its detailed planning.
"Looking to 2012 and beyond, we expect to achieve even stronger operating results as we benefit from our ‘Met Build-Out’ project,” he said, noting that it has commenced production recently at new met operations Gateway Eagle and Workman Bench.
The company has also made significant progress at its Kanawha Eagle Peerless operation, where it has been developing an entry slope and will begin production later this year.
"Further, as 2012 comes more clearly into view, we will see a positive impact from the re-pricing to market levels of 3.5 million tons of Illinois Basin coal currently sold under a legacy customer contract,” he said.
“Our team is actively managing the sale of these tons, with close to 80 per cent of the volume already sold for 2012."
Patriot’s expansion plans also played a role in the company’s capital expenditures in the second quarter, which totaled $40.7 million. For the year, continued growth efforts will bring capex to approximately $175 million.
In its outlook, 2011 sales volumes should be in the range of 31 to 32Mt, at least 8Mt of which will come from its met coal segment.
Expected costs per ton for the third quarter in Appalachia will be in the mid-$70s, officials said, and declining to the low $70s in the fourth quarter.
Full-year costs will average just over $70/t as met percentages increase to approximately 35% by the end of the year from 30% at the beginning of 2011.
In Illinois, costs per ton this year will average $42 to $44.
“Higher cost per ton will result from the new met mines beginning production in 2011, higher sales-related costs, and increased costs related to an anticipated new labor agreement with the UMWA,” the company said.
“Additionally, the third quarter will be impacted by longwall moves at both Federal and Panther, downtime for miner vacations and repairs performed during the vacation periods.”
