Consol releases full year results

US COAL miner Consol Energy improved earnings by 72% for the year ended June 2001, with net income of US$184 million.

Staff Reporter

"Consistent earnings generation has been a hallmark of this company, and this year is no exception," said J Brett Harvey, president and chief executive officer. "In the last 10 years, we have earned more than $1.1 billion for our shareholders because of our rich asset base. We believe our multi-energy strategy of producing coal, gas and electricity will further enhance our ability to generate strong earnings performance."

Total coal sales, including sales from equity affiliates, for the year were 77.7 million tons, of which 74.6 million tons were produced by company or equity affiliate operations or sold from inventory. In the same period a year earlier, total tons sold were 78.7 million tons, of which 73.1 million tons were produced by company or equity affiliate operations or sold from inventory.

The average realised price per ton of company or equity affiliate produced coal was $23.93 per ton, compared with $23.66 for the same period a year earlier. Coal production, including equity affiliates, for the year just ended was 71.9 million tons, compared with 73.1 million tons a year earlier.

Net income for the quarter ended June 30, 2001 was US$49.3 million compared with US$36.8 million.

Coal segment results for fiscal year 2001 were adversely affected by lower sales and higher production costs per ton partially offset by higher prices.

Despite strong demand for coal during the year production shortfalls at Mine 84 and low inventory levels at company mines prevented Consol from satisfying demand. Production at Mine 84 was approximately 3.5 million tons less than previous year. Sales of company-produced coal were 1.4 million tons lower year-to-year and coal production, including equity affiliate, was 1.2 million tons lower than the year earlier.

"Several of our mines had outstanding production years," said Harvey. "Unfortunately, their results were masked by the very difficult situation we had with Mine 84. Consol Energy productivity fell 4.6% during the year and was 42.2 tons per man-day. However, excluding Mine 84, productivity was 44.9 tons per man-day compared with 44.2 tons per man-day in the previous year."

The Bailey Mine set a production record of 10.4 million clean tons in the year. The Enlow Fork Mine produced 9.9 million clean tons. Both mines process their coal through a central preparation plant. The total of 20.3 million clean tons through the Bailey Central Preparation Plant during the fiscal year also was a record and is believed to be a world record.

Bailey, Cardinal River, Humphrey, Blacksville 2, Shoemaker, Mahoning Valley, Dilworth, VP 8, Jones Fork and Mill Creek mines all increased production in the year-to-year comparison. Loveridge Mine completed the mining of 1.1 million tons of coal that had been developed prior to a mine fire.

Loveridge Mine is now idle and its longwall mining equipment relocated to Robinson Run Mine, as previously planned.

Primarily as a result of the problems encountered at Mine 84, total costs per ton of coal produced rose 6.8% during the year and average profit per ton of coal produced declined $1.08 to $2.58.

Coal prices improved steadily through the year. Average realised price per ton of company-produced coal in June 2001 was $25.23, compared with $22.86 in June of 2000.

"Demand for steam coal for power generation in the United States, and demand for both steam and metallurgical coals worldwide, has been strong since last fall," Harvey explained. "In addition, supplies of coal were tight because of production problems reported by many producers."

Harvey said that preliminary industry and government reports suggest that coal increased its share of the power generation market in the United States during the first six months of calendar 2001.

Developments during the year included the purchase of a 50% interest in the Glennies Creek Mine, currently under development in New South Wales. When development is completed in May 2002, the mine will produce coal by longwall mining.

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