Consol Energy profit beats estimates on lower costs
(Reuters) - Coal and natural gas producer Consol Energy Inc's (CNX.N) fourth-quarter profit beat analysts' estimates for the first time in a year as cost control helped counter the impact of weak coal prices, sending its shares up 6 percent.
The company, which has one of the lowest cost structures in both its businesses, said fourth-quarter cost per ton of coal sold fell 8 percent to $48.21, the lowest in 2012.
"Costs in all three operating segments were stronger than we expected," analysts at Simmons & Co said.
Shutdown of the higher-cost Fola mine near Bickmore in West Virginia, fewer maintenance projects and less overtime brought down costs in the fourth quarter.
Tudor, Pickering, Holt & Co analysts said majority of the company's saving should be sustainable though maintenance-related savings were one-time.
The Fola complex produced 1.05 million tons of coal until late June, when it was idled.
Coal sales fell by half a million tons in the fourth quarter.
Weak demand from steelmakers in China and Europe and a rebound in exports out of Australia, the world's biggest exporter of steel-making coal, pulled down prices during the quarter.
Benchmark prices for met coal fell 37 percent during the October-December quarter from a year earlier, while benchmark thermal coal prices dropped 26 percent.
Consol's net income fell 23 percent to $150 million, or 65 cents per share, in the fourth quarter from $196 million, or 85 cents per share, a year earlier, on lower sales volume and weak prices for steel-making coal.
Excluding one-time items, Pittsburgh-based Consol earned 43 cents per share, above estimates of 24 cents per share, according to Thomson Reuters I/B/E/S.
Consol, the largest coal company in the United States by market value, reported a 10 percent drop in total revenue and other income to $1.39 billion.
(Reporting by Garima Goel and Swetha Gopinath in Bangalore; Editing by Don Sebastian and Saumyadeb Chakrabarty)