Better margins fail to lift TECO result

TECO Energy has reported a lower net income of $US50.5 million for the March quarter despite increasing the margins on the sale of its specialty coals.
Better margins fail to lift TECO result Better margins fail to lift TECO result Better margins fail to lift TECO result Better margins fail to lift TECO result Better margins fail to lift TECO result

A TECO Coal operation. Courtesy TECO Energy

Lou Caruana

TECO’s coal division reported first-quarter net income of $9.8 million on sales of 1.4 million tons, compared to $8.2 million on sales of 2.1Mt in the same period of 2011.

Results reflected an average net per-ton selling price, excluding transportation allowances, of almost $96 per ton, compared to more than $81/t in 2011.

"We are pleased to report earnings consistent with last year, despite the mildest winter in 40 years,” TECO Energy president John Ramil said.

“We are also very pleased with the $4 per ton margin expansion that TECO Coal achieved this quarter from better selling prices for its specialty coals from contracts signed in 2011 when prices were stronger."

In the first quarter of 2012, the total per-ton cost of production was $87, compared to $76 in the 2011 period.

Q1 costs reflect the idling of a section of a mine and other costs associated with reducing production in January and thus are at the high end of the 2012 cost range.

Compared to 2011, costs also reflect higher surface mining costs due to increased diesel fuel usage as a result of trucking coal and overburden further due to the lack of new surface mine permits; higher royalty and severance fees, which are related to selling costs; and spreading fixed costs over fewer tons.

TECO Coal's effective income tax rate in the first quarter of 2012 was 24%, compared to 16% in the 2011 period.

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