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UPDATE 2-Alliance Resource ups FY10 outlook; shares rise
July 26, 2010 / 12:10 PM / 7 years ago

UPDATE 2-Alliance Resource ups FY10 outlook; shares rise

* Sees FY10 profit $305 mln to $335 mln vs est. $204 mln

* Says secured sales for about 29.8 million tons in 2011

* Q2 EPS $1.82/lpu vs est. $1.38/lpu

* Rev up 32 pct to $400.3 mln

* Shares up 5 pct

(Adds conference call details, share movement)

July 26 (Reuters) - Diversified coal producer Alliance Resource Partners LP (ARLP.O) raised its full-year outlook and said it expects FY11 contract base and average price level to be higher than FY10, sending its shares up 5 percent.

The company sees 2010 net income of $305 million to $335 million on revenue of nearly $1.6 billion, excluding transportation revenues.

Revenue for the third quarter and fourth quarter is expected to be at a level that is comparable to second quarter, Alliance said on a conference call with analysts.

It had previously forecast annual net income between $270 million to $300 million, on revenue of $1.5 billion to $1.6 billion, excluding transportation revenues.

Analysts on average expect full-year income of $204 million on revenue of $1.59 billion, according to Thomson Reuters I/B/E/S.

The company, that mainly produces steam coal for U.S. utilities, sees continued higher coal demand as Energy Information Administration estimates a 3.5 percent year-over-year growth in electricity demand for the remainder of 2010.

Alliance said it has recently executed new coal sales agreements for delivering 7.1 million tons over the next four years at a price level 15 percent to 20 percent above its current average price realizations, Chief Executive Joseph Craft said on a conference call.

The company that currently operates nine underground mining complexes expects a higher contract base and average sales price level in 2011 compared with 2010.

It has already secured sales commitments for about 29.8 million tons in 2011.

“Based upon current negotiations and other expressions of interest by utilities, Alliance is hopeful that we can sign additional new long-term contracts this year, enabling us to maintain 16 continuous mining shifts of production at the River View mine,” Craft told analysts.

Production at the company’s River View mine could go up 10 percent above its design level of 6.4 million tons, it said.

Shares of the Tulsa, Oklahoma-based company were trading at $49.49 Monday afternoon on Nasdaq.

STRONG Q2 RESULTS

Alliance posted higher-than-expected quarterly results, helped by strong coal sales.

For the latest second quarter, the company reported net income of $85.5 million, or $1.82 per limited partner unit, compared with $41.5 million, or 72 cents per unit, a year earlier.

Revenue rose 32 percent to $400.3 million.

Quarterly production volumes rose 9 percent to 6.9 million tons, while average coal sales prices rose about 12 percent to $51.53 per ton sold.

Analysts on average expected the company to earn $1.38 per unit, on revenue of $393.45 million. (Reporting by Vinay Sarawagi in Bangalore; Editing by Vyas Mohan)

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