Loss to profit for Massey

ON the back of a record coal market Massey Energy reported profitable quarterly and full year results, up significantly on 2003 when the company recorded a loss of $40.2 million.
Loss to profit for Massey Loss to profit for Massey Loss to profit for Massey Loss to profit for Massey Loss to profit for Massey

Massey's Independence Coal Company. Courtesy Massey Energy.

Angie Tomlinson

Net income in 2004 totaled $13.9 million. December quarter net profit was US$1.4 million, a marked improvement of a net loss of $16.7 million in the 2004 fourth quarter.


Production for the quarter was 10.2 million tons. Coal revenues of $360.9 million in the fourth quarter increased 12% over the $323.1 million recorded in the comparable period in 2003.


Coal produced this year remained fully committed, with per ton realization for 2005 expected to average between $41 and $42, with 2006 projection for more than $50 per ton.


"While no one can accurately predict when the worldwide coal supply/demand imbalance will correct itself, circumstances in markets in which Massey primarily operates - the Eastern U.S. utility and metallurgical markets and the export metallurgical coal market - do appear to have staying power for the foreseeable future," Massey chief Don Blankenship said.


Though its new mines and mine expansions completed in 2004, Massey anticipated it would add more than six million tons of incremental capacity in 2005. The company said increased capacity, along with improved shipments from some of its underground mines, will allow it to ship 46-48 million tons in 2005. However, uncertainty about erratic railroad service continued to cause concern.


Massey experienced some cost increases in the fourth quarter due to higher labor wage and benefit costs, higher training costs for new and less experienced miners, increased steel, diesel fuel and explosives costs, higher costs associated with processing more metallurgical grade coal, expanded sales-related costs and lower sales volume. The company projected per ton cash costs of between $32 and $33 in 2005.