Massey Energy Co. (MEE) − the largest coal company in Central Appalachia, Virginia – announced fourth-quarter earnings of 28 cents per share, in line with the Zacks Consensus Estimate. In fiscal 2009, the company felt the impact of falling energy demand precipitated by a weak global economy. As part of its restructuring effort, the company re-negotiated supply contracts as well as slashed personnel costs through retrenchment and salary cuts. Massey Energy also focused its production efforts on lower-overhead mines and idling higher cost ones.
 
Revenues in the reported quarter plunged 22.7% year over year to $583.9 million, reflecting lower demand from electric utilities and steelmakers. In addition, weather, weather-related power outages and disruption of rail and ocean transport significantly impacted Massey’s operations. Produced tons sold in the reported quarter totaled 7.8 million compared to 10.2 million in the year-ago quarter.
 
Massey Energy’s operating cash margin per ton in the quarter decreased 1% to $14.26 compared to $14.42 in the year-ago quarter. The lower cash margin resulted from an increase of 2% in revenue per ton, which was offset by an increase of 3% in average cash cost per ton.
 
Average coal revenue per ton for the reported quarter was $64.13 compared to $62.69 in the year-ago quarter. The improvement was driven by price increases for utility and industrial coal and an increase in the proportional mix of metallurgical coal sold during the reported quarter. Average cash cost per ton for the reported quarter was $49.87 compared to $48.27 in the year-ago quarter. The increase was due largely to higher fixed cost absorption on lower total tons sold during the period.
 
Massey Energy ended fiscal 2009 with $665.8 million in cash and short-term investments compared to $640 million of cash and short-term investments at year-end fiscal 2008. The company had $98.4 million available under its asset-based revolving credit facility at December 31, 2009. Massey Energy had a long-term debt of $1.3 billion at year-end 2009. The company reduced total debt by $5.2 million and net debt by $30.3 million during the fourth quarter of 2009.
 
Massey Energy expects fiscal 2010 coal shipments to be in the range of 37 to 41 million tons, with average coal realization between $67 and $70 per ton.  The company has approximately 39.6 million tons of coal committed for sale in 2010.  Of these, 33.8 million tons are sold and priced at an average price of approximately $64. Average cash cost per ton for full year 2010 is expected to be in the range of $49 to $52.
 
Massey Energy expects fiscal 2011 coal shipments in the range of 37 to 44 million tons with average coal realization between $70 and $76 per ton.  The company has commitments for sales of 30.5 million tons of coal in 2011.  Of these, 21.4 million tons would be sold and priced at an average price of approximately $68 per ton. Average cash cost per ton for fiscal 2011 is expected to be in the range of $47 to $53.
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