* Fourth-quarter adjusted loss $0.55/share vs est
* Sees Q1 met coal sales higher than Q4, 2014 sales higher
* Sees FY 2014 capex below $150 mln vs $153.9 mln in 2013
* Q4 revenue falls 1 pct to $472 mln
* Shares rise as much as 6 pct
By Kanika Sikka
Feb 20 Coal miner Walter Energy Inc
reported a smaller-than-expected fourth-quarter loss due to cost
cuts, and forecast a slight improvement in demand for
metallurgical, or steel-making, coal in 2014, sending its shares
up 6 percent.
The company's outlook is in contrast to that of other U.S.
miners such as Arch Coal and Alpha Natural Resources
who expect an improvement in demand for
electricity-generating thermal coal rather than metallurgical
"Along with a projected steel demand growth (in 2014),
demand for metallurgical coal is expected to grow by close to 30
million tons," Walter Energy's Chief Executive Walter Scheller
said on a conference call.
Weak prices for both types of coal due to low demand and
excess supply for the past year or so have forced Walter Energy
and other miners to rein in spending to cope with the weak
Walter Energy cut its capital expenditure by 60.6 percent to
$153.9 million in 2013 and expects to spend less than $150
million in 2014, Chief Financial Officer Bill Harvey said.
"The company's good job streamlining its operations to work
through the current downturn should be well received by
investors," analysts at Simmons & Co said in a note to clients.
However not all analysts shared the company's enthusiasm for
a recovery in demand for metallurgical coal.
"We believe that in absence of a price recovery and greater
clarity on asset sales and the capital structure, the name
remains the most exposed to current weakness in the met coal
market," Brean Capital analyst Lucas Pipes said.
Walter Energy acknowledged that the weak market would delay
its restructuring efforts, from which its expects generate about
$250 million through asset sales.
The company now expects most of the sales to take place in
the second half of 2014, compared to its earlier target of an
MORE MET COAL
Still, Walter Energy said it expects metallurgical coal
sales in the first quarter to exceed that in the fourth quarter,
and full-year sales to modestly exceed that in 2013.
The company expects to produce about 11 million to 12
million tons of metallurgical coal in 2014, compared with the
11.6 million metric tons it produced in 2013.
The company, with operations in North America and the United
Kingdom, said it would produce lesser thermal coal in 2014 than
it did in 2013.
The company cut production costs by 20.6 percent in the
fourth quarter ended Dec. 31, helping alleviate a 10 percent
drop in the price of metallurgical coal.
Walter Energy's sales of metallurgical rose 16 percent to
2.9 million metric tons, accounting for about 85 percent of
total coal sales volume in the quarter. The company also
produces thermal coal.
However total revenue slipped about 1 percent to $472
million, reflecting low coal prices.
Excluding one-time items, Walter posted a loss of 55 cents
per share in quarter, compared with the average analyst estimate
of 84 cents, according to Thomson Reuters I/B/E/S.
Taking into account a tax-related charge of $140.2 million,
the company's net loss increased to $174.3 million, or $2.79 per
share, from $71 million or $1.13 per share, a year earlier.
Walter's shares rose 2.3 percent to $11.31 in afternoon
trading on Thursday on the New York Stock Exchange. The shares,
which have fallen about 71 percent in the past year, touched a
high of $11.77 earlier in the day.