UPDATE 2-Alpha Natural Q1 profit tops Street view; shares gain

* Q1 EPS $0.58 vs estimate of $0.48

* Q1 revenue falls 1 pct to $486.7 mln

* Margins-per-ton soar 81 percent

* Shares up 22 pct (Recasts; adds details, analyst comments; stock movement)

By Antonita Madonna Devotta

BANGALORE, May 6 (Reuters) - Coal miner Alpha Natural Resources Inc (ANR.N) reported a 61 percent rise in first-quarter profit, beating market estimates, as higher coal prices and lower costs offset sagging demand, sending shares of the company as high as 22 percent.

Though the management on the conference call indicated the second quarter may not be as good as the first, the equity market is responding to a really strong quarter, analyst Pearce Hammond of Simmons & Co International said.

Coal markets are going through a tough spell at the moment, but certain coal companies have signed steam and met coal contracts at much higher prices in the past, than would have been possible today, he said.

For the quarter, Alpha posted a net income of $41 million, or 58 cents a share, compared with $25.5 million, or 39 cents, a year earlier.

Revenue from coal sales rose marginally to $424.4 million, despite a 1.3 million ton drop in sales volumes, the company said in a statement.

Analysts on average expected earnings of 48 cents a share, before items, on revenue of $515.5 million, according to Reuters Estimates.

"The beat was driven by excellent cost control and higher price realizations for thermal coal. Met coal shipments also held up reasonably well, coming in at over 2 million tons in the first quarter versus 2.4 million tons last quarter," analyst Jeremy Sussman from Natixis Bleichroeder said.

This was the area (met coal shipments) that most clients were concerned about, he added.

Alpha's average margin per ton surged 81 percent to $23.48, while coal sales prices rose 25 percent.

Other coal companies such as Consol Energy Inc (CNX.N), Patriot Coal Corp (PCX.N) and James River Coal Co (JRCC.O) also saw their first-quarter boosted by a jump in pricing, helping offset the drop in shipments.

Alpha adjusted production to bring raw coal output and inventories in line with its sales commitments, and utilized its mines that yield higher number of tons at lower unit production costs, Chief Executive Michael Quillen said in a statement.