Alpha riding high on production, profit increases

APPALACHIAN coal producer Alpha Natural Resources released its first quarter results Thursday, citing increased demand and coal prices for its 29% increase in coal production and 21% gain in revenue per tonne.
Alpha riding high on production, profit increases Alpha riding high on production, profit increases Alpha riding high on production, profit increases Alpha riding high on production, profit increases Alpha riding high on production, profit increases

Courtesy Alpha Natural Resources.

Donna Schmidt

ANR recorded revenues of $US482 million for the quarter ended March 31, compared with $312 million in the prior year, a 54% increase. Of current quarter revenues, $424 million resulted from coal sales, a figure also up over 50% from last year.

Net income for the first quarter was $27 million, a record for the Virginia-based company. In the first quarter of 2005, Alpha reported a net loss of $25.8 million. First quarter results include the Nicewonder Coal Group acquisition, renamed Callaway Natural Resources, which ANR completed in October 2005.

“Our performance continues to underscore what Alpha excels at: mining high quality coals and optimising specifications for our customers, which results in excellent margins,” said Alpha president Michael Quillen.

“We’re also pleased with the smooth integration of Callaway and the positive contribution this new business unit is already making.”

Quillen noted the industry’s skills shortage as an issue that will likely impact their bottom line going into the future.

“Labour is going to be the issue for our industry. We recognise as we look to replace [older miners leaving], the talent is not always there,” he said, adding that Alpha’s current 16% turnover rate for its mine workers is “higher than we like, but it's come down in the last six months”

The company announced earlier this week its acquisition of two Progress Fuels operations in Kentucky is now complete. Alpha now controls an additional 73 million tonnes through its stock ownership of Diamond May Coal and asset holdings of Kentucky May Coal. The price tag on the deal was $23 million, which included an adjustment for working capital of $3.7 million.

Alpha, with more than 3700 employees across the US, operates mines in Virginia, Kentucky, West Virginia and Pennsylvania.

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