Consolidated Energy Earnings Fall On Lower Coal Sales Volumes
October 22 2009 - 09:14AM
Dow Jones News
Consol Energy Inc. (CNX) reported a drop in third-quarter
earnings as margins improved, but sales volumes fell amid record
coal stockpiles at U.S. power plants.
The Pittsburgh company reported earnings of $87.4 million, or 48
cents a share, down from $90.1 million, or 49 cents a share, a year
earlier. Revenue fell 7% to $1.09 billion.
Analysts surveyed by Thomson Reuters expected per-share earnings
of 66 cents on revenue of $1.1 billion.
U.S. coal producers have been struggling with a supply glut for
thermal coal amid recession-weakened power demand and increased use
of natural gas-fired power plants that have displaced coal-fired
plants. The industry has started to see a rebound in demand for
metallurgical coal used in steel production driven by China.
Sales volumes for thermal coal were down 10% to 13 million tons.
The company saw operating margins climb 77% as the average realized
price per ton rose to $58.07 from $46.75 on contracts signed in
prior years. Metallurgical coal sales volumes and operating margins
dropped from a year ago, but the company said a stronger market
enabled it to produce more than expected.
As for the remainder of the year and 2010, the company said it
expects the high inventories to weigh on the thermal coal market
until at the least the first half of next year. But when the market
tightens, it will happen quickly in part because of the production
cuts over the last year.
"With regard to the economic outlook, our best indicators are
our own inventories," Consol Chief Executive J. Brett Harvey said
in a press release. "We will not overproduce if markets remain
weak."
CNX Gas Corp. (CXG) reported net income attributable to
shareholders of $35.5 million for the third quarter, down from
$67.4 million a year earlier. Consol Energy owns 83% of the
natural-gas production company.
Consol shares were down 3.1% to $49.50 premarket.
-By Mark Peters, Dow Jones Newswires; 212-416-2457;
mark.peters@dowjones.com
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