Monday, May 2, 2011

Alpha Natural Resources Inc. (NYSE: ANR): Q1 Earnings Preview 2011

Alpha Natural Resources Inc. (NYSE: ANR), the third-largest US coal producer, is scheduled to release its first-quarter earnings before the opening bell on Tuesday, May 3, 2011. Analysts, on average, expect the company to report earnings of 91 cents per share on revenue of $1.06 billion. In the year ago quarter, the company reported earnings of 69 per share on revenue of $922 million.

Alpha Natural Resources, Inc. operates as a coal producer primarily in the central Appalachian and northern Appalachian regions. The Company is a supplier and exporter of metallurgical coal for use in the steel-making process, and a supplier of thermal coal to electric utilities and manufacturing industries.

In the preceding fourth-quarter, the Abingdon, Virginia-based company's net income was $10.84 million, or 9 cents per share, compared to $17.95 million, or 15 cents per share, in the year-earlier quarter. On an adjusted basis, the company earned 27 cents per share. Revenue increased to $993.12 million from $893.29 million in the prior-year quarter. Analysts, on average, expected the company to report earnings of 24 cents per share on revenue of $970.30 million.

At its last earnings call in February, the company said that it expects to ship between 13 million tons and 14.5 million tons of metallurgical coal in the year 2011. Capital expenditures are expected to range between $340 million and $440 million for the year. 

The Industrial Metals and Minerals sector has enjoyed strong profits lately due to surging demand for coal. Doubling in some cases, profits are up thanks to voracious coal consumption in emerging markets. Trying to satisfy their growing energy needs, countries like China and India are importing large amounts of coal for electricity production. Chinese coal imports were up 60% in 2010. Demand for steel is also on the rise as economic growth picks up steam in the developing world and elsewhere.

High crude oil prices are also bolstering coal's price as coal can be used as an alternative for electricity generation in many cases. 

Demand for metallurgical coal that is used to make steel has also increased. Alpha Natural Resources Inc. recently acquired Massey Energy Co. to make it the third largest metallurgical coal producer in the world. With 90% of Alpha Natural Resource's 2012 shipments open to market pricing, it is well positioned to benefit from the strong pricing environment.

Full Disclosure: None.
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