Coal miner Walter Energy Inc. (NYSE: WLT) this morning lowered its revenue and profit forecasts for the current quarter, but, in a bit of an odd turn, maintained its full-year production forecast. Here’s what the CEO had to say:
Compared with the fourth quarter of 2011, we expect strong production growth, but revenue and profitability will be disappointing due to flat sales volume and weaker coal pricesexperienced across the industry in the first quarter of 2012. We remain confident that production will be within the guidance provided for 2012, and we continue to take steps to optimize production at our highest-margin mines to help offset weakening global metallurgical coal prices.
The company expects metallurgical coal production of 2.8-2.9 million metric tons in the first quarter and said that full-year met coal production would reach 11.5-13 million metric tons, as originally forecast. But:
To support margins, beginning in the second quarter Walter Energy will decrease production from its lower-margin Maple underground coal mine in West Virginia by approximately 35% due to market conditions for Maple’s production. The reduction will be offset in part by increased output of higher-margin HCC [hard coking coal] from Alabama and Canada.2012
The company said prices for hard coking coal coal are down by 10% this year and prices for met are off 15%. Walter Energy did not provide a pricing forecast.
Exactly how the company expects to reduce production and maintain production at the same time is an exercise left for the reader.
Shares are down about -2.7% at $61.05 in a 52-week range of $53.41-$143.76.