Election Outcome, Poor Pricing Hammer James River Coal

James River Coal Co. (NASDAQ: JRCC) reported third-quarter 2012 earnings this morning. The mining company posted a net loss of $0.59 per share on revenues of $288.1 million. In the same period a year ago, the company reported a net loss of $0.11 per share on revenues of $303.86 million. Third-quarter results also compare to the Thomson Reuters consensus estimates for a net loss of $1.04 per share and $261.65 million in revenues.

The company's CEO said:

We are very pleased to have the uncertainty of the U.S. presidential election behind us. We believe that this issue caused a temporary slowdown in economic growth both in the United States and globally. The slowdown in growth, combined with warm weather last winter, has contributed to an unusually weak market for thermal and metallurgical coal. Hopefully, this condition will be corrected shortly.

The company offered no word on guidance, but the consensus estimates call for a fourth-quarter net loss of $1.04 per share on revenues of $259.65 million. For the full year, the loss estimate is $3.31 per share on revenue of $990.79 million.

James River did comment on its sales positions for 2013, however, and the news is not so good there. As of yesterday, the company has agreed to ship 3.4 million tons of central Appalachian coal at an average price of $74.04 per ton, down more than $5 a ton from its average pricing in August. The company also priced 2.34 million tons of Midwestern coal at $45.25 per ton in November, a modest decline of $0.10 a ton.

Weaker pricing and general concern that coal burning will face increasing pressure in a second Obama administration have sunk the company's stock price today. Competitors Peabody Energy Corp. (NYSE: BTU), Arch Coal Inc. (NYSE: ACI), and Alpha Natural Resources Inc. (NYSE: ANR) are down 8.5%, 11.7% and 10.5%, respectively today, certainly due to the election outcome.

James River's shares are down 22.3% this morning, at $3.65 in a 52-week range of $1.68 to $9.18. The consensus target price for the shares was around $3.21 before today's report.

For more coverage of how the election could affect stock prices, see our Election Winners and Losers story.

Paul Ausick


Filed under: 24/7 Wall St. Wire, Commodities & Metals, Earnings, Emerging Markets Tagged: ACI, ANR, BTU, JRCC

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