For the period ended June 30, the company’s revenues grew 10% to $US303.9 million and net income was $41.5 million, a rise of 13%. While lower sales per ton were realised in the period, improved pricing offset that and drove revenues upward.
Alliance said its average coal sales price for the quarter was $46.04/t, a jump of 16.6% year-on-year, and sales volumes were down 5.7% to 6.2 million tons with a weaker spot market and export sales, as well as unforeseen outages at its customers’ plants.
The company did make production adjustments to more closely match demand and obligations, which brought its production volumes down from 6.5Mt in the 2008 second quarter to 6.3Mt for the period just ended.
Revenues rose 13.1% to $633.2 million, while per-ton average sales prices were up $8.35 to $47.33, offsetting a 942,000t drop in coal sales volumes versus last year.
Meanwhile, net income for the half was $114 million, compared to last year’s reported $79.9 million.
"ARLP has delivered record financial results through the first six months of 2009 and we remain on track to post our ninth consecutive year of record results," company president and chief executive Joseph Craft III said.
"Despite strong current headwinds from significant reductions in electricity generation and decreased demand for coal, we continue to be optimistic about the long-term fundamentals for our partnership.”
Craft added that the company was encouraged by discussions with customers for long-term Illinois Basin coal supplies.
One area of contention in the quarter was expenses, which was reflected in its plan to adjust and reduce capital expenditures to $350-400 million – which includes capital costs for maintenance.
“Since the beginning of the year, adjustments to operating plans and construction schedules have reduced planned capital expenditures by $70-80 million … [as] a result, although 2009 financial results will be below initial estimates, ARLP currently anticipates year-end liquidity levels comparable to original expectations.”
Looking ahead, Craft said Alliance expected coal demand to remain “constrained” through next year. Production cuts at its operations – namely Pontiki – were evidence of its ability to manage volumes in a difficult environment.
“Due to the operational adjustments made thus far, ARLP is currently anticipating coal production for 2009 in a range of 25.9 to 26.4Mt, substantially all of which is contractually committed and priced,” he said.
“Although we are lowering guidance to reflect these adjustments necessitated by lower market demand, ARLP is well positioned to deliver record financial results in 2009 relying on strong contractual commitments at favourable pricing and operational excellence."
For 2010, the company has committed 25.7Mt, with 23.8Mt for 2011 and 16.9Mt for 2012. Across those three years, the sales commitments still remaining open to market pricing are 1.5Mt, 1.5Mt and 1Mt.
The company opted to reduce the full-year guidance for some of its financial metrics as well. Revenues (excluding transportation revenues) are expected to be $1.2-1.3 billion, while net income should be at $185-215 million.
“These estimated ranges reflect ARLP's current expectations and its best judgements regarding the coal markets, coal sales volumes and other factors for the balance of 2009,” Craft noted, adding that many of these other factors were outside of the company’s control.
