RICHMOND, Va. (AP) — James River Coal Co. said Wednesday that its third-quarter loss widened as weak demand drove down prices and the coal producer experienced higher costs. Its shares skidded lower in morning trading.
The Richmond-based company, with operations in Kentucky, West Virginia and Indiana, mines thermal coal used for power generation and metallurgical coal, used to produce steel.
James River and other coal producers are being hit by a double whammy of weak demand. Utilities need less coal to produce electricity because of mild weather and lower power generation, while construction overseas has slowed the appetite for coal to make steel.
The company reported a net loss of $20.6 million, or 59 cents per share, for the July-September quarter. That is larger than its loss of $3.7 million, or 11 cents per share, a year earlier.
On an adjusted basis, the company said it lost $1.21, compared with Wall Street expectations for an adjusted loss of $1.05 per share, according to FactSet.
Revenue fell 5 percent to $288.1 million as coal sales fell about 9 percent to $264.6 million. Coal shipments were flat at 3.16 million tons. Analysts expected overall revenue of $265.7 million.
James River said the cost of sales grew about 5 percent as freight and handling expenses nearly doubled.
Its shares tumbled $1.18, or 25.2 percent, to $3.52 in morning trading. Its shares hit a 52-week low of $1.68 in late July and traded as high as $9.18 almost a year ago.
CEO Peter Socha said in a news release that uncertainty of the presidential election caused a temporary slowdown in economic growth both in the U.S. and globally.
“The slowdown in growth, combined with warm weather last winter, has contributed to an unusually weak market for thermal and metallurgical coal,” Socha said. “Hopefully, this condition will be corrected shortly,”
Despite the soft coal markets, Socha said the company is pleased with the performance of its mine operations team as it continues to manage production to control inventories.
James River Coal said it believes the thermal coal market is in the 8th inning of recovery and the steelmaking coal market is in the 4th inning of recovery. It also said it expects natural gas markets to tighten through 2013.
The company also said Wednesday that, through mid-October, it repurchased $61.4 million principal amount of its debt for $23.9 million.
