For the period ended June 30, net earnings were $US107.4 million, down from $116.2 million year-on-year, while costs jumped 157% to $619.3 million.
Global steelmaker demand sent Walter’s metallurgical coal revenue up more than 88% to $773 million from $410.6 million. The company cited the addition of new mines in Canada, West Virginia, the UK and its newly acquired North River operations for the improvement, as well as a higher average metallurgical coal pricing at its US mines.
Performance at the new North American and European complexes did help to offset its operating income, which totaled $153.6 million in the quarter, but it was not enough to keep the one-time acquisition charges from impacting the producer’s balance sheet. In the comparable period of 2010, Walter reported $170.2 million in operating income.
Sold tonnage did go up from 1.5 million metric tons in the previous year to a record 2.7 million metric tons in the June quarter, and Walter said met production volumes saw an improvement of 58.7% year-on-year to 2.5 million metric tons. The rise in sales was also attributed to the Canadian, West Virginian and Welsh operations in its portfolio.
"Walter Energy continues to execute on its long-term strategic plan to grow its met coal production base, highlighted by the acquisition of Western in April and our execution of lease agreements on 68 million metric tons of Blue Creek coal reserves in May," interim chief executive officer Joe Leonard said.
"Those initiatives are beginning to show positive results as we increased met coal sales to a record…and we expect to grow total met coal sales volumes by an additional 50% by the end of 2013.”
Capital expenditures rose for Walter during the period to $92.1 million from $30.7 million in 2010’s same quarter. Officials said the expansion of the Canadian operations was mostly to blame, with $51.7 million in spending at the Canadian and UK operations and $13.9 million in additional spending at the US operations versus last year.
Looking ahead, Leonard said Walter had “opportunities in [the] pipeline” for growth that aid it in further increases and diversification of its metallurgical production footprint over the next ten years.
"During the quarter, we experienced difficult geology in Alabama and weather-related challenges at both our Alabama and Northeast British Columbia operations, which adversely affected production and sales results,” he said.
We are putting these production issues behind us and expect to finish 2011 with second half met coal sales of approximately 5.9 million metric tons."
