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James River Coal posts 2Q profit on debt exchange

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MICHAEL FELBERBAUM,AP Business Writer

RICHMOND, Va. (AP) — James River Coal Co. on Friday posted a second-quarter profit as it recorded a gain related to a debt sale. Its revenue and coal shipments fell.

The Richmond, Va.-based company mines thermal coal for power generation and metallurgical coal used to produce steel. It has operations in Kentucky, West Virginia and Indiana.

The coal industry has struggled amid continued soft demand that has driven down prices, as many utilities turned to cheaper natural gas to run generators. Less construction overseas also has slowed the appetite for coal to make steel.

James River Coal said it earned $52.6 million, or $1.16 per share, for the period ended June 30, compared with a loss of $25.8 million, or 74 cents per share, a year ago.

The results included a gain of $2.20 per share related to the issuance of convertible senior notes. Without the gain, its adjusted loss was $1.04 per share. Analysts expected a larger adjusted loss of $1.34 per share.

Revenue fell 42 percent to $160.1 million as prices remained weak and coal revenue decreased. Analysts polled by FactSet expected higher revenue of $195 million.

Its shares rose 18 cents, or 10 percent, to $1.96 in morning trading Friday.

In a conference call with investors, CEO Peter Socha said the company's mine operations continue to adjust to soft coal market conditions following a major restructuring of its mines and support services.

During the quarter James River Coal's cost of sales fell nearly 34 percent to $181.9 million and the company's cost per ton of coal fell 14 percent to $66.04.

But its gross profit per ton — the amount of sales left over after subtracting the cost of sales — was a loss of $10.06 per ton, compared with a profit of 96 cents per ton a year ago.

Looking forward, Socha said that while thermal markets remain weak, there are several factors that may lead to improvement in the second half of the year and into 2014. However, he said the company is a little more cautious about the weak market for steel-making coal.

 

Copyright 2013 The Associated Press