Walter Energy says coal prices firming, shares rise

Reuters

Oct 30 (Reuters) - Coal miner Walter Energy Inc saidprices on steel-making coal are improving and will continue tofirm next year due to strong demand in Asia, sending its sharesup 3.3 percent despite a larger-than-expected quarterly loss.

The news cheered Walter investors, who have endured a 55percent drop in the stock this year as weak demand for steel hashit prices of metallurgical coal.

"It appears that the market for their product, which is metcoal, is seeing some signs of positive life," Sterne Ageeanalyst Mike Dudas said, adding that the company had done a goodjob of controlling costs.

Walter rival Arch Coal Inc on Tuesday cut itsproduction outlook for steel-making coal for the second timethis year due to weak prices.

However, Walter Energy Chief Executive Walt Scheller saidprices were showing sustainable improvement.

"It's good to see the market moving in a positivedirection," he told analysts on a conference call. "And met coalprices should further improve in 2014 assuming continued strongdemand in Asia."

Walter Energy reported a net loss of $100.7 million, or$1.61 per share, for the third quarter ended Sept. 30. ()

The company's net loss was $1.1 billion, or $16.97 pershare, in the year-ago quarter as it took a $1.1 billionimpairment charge related to its acquisition of Western Coal.

Excluding one-time items, the third-quarter loss was $1.30per share, bigger than the average analyst estimate of $1.02,according to Thomson Reuters I/B/E/S.

Revenue fell nearly 26 percent to $455.8 million, primarilybecause of lower prices of metallurgical coal.

Higher metallurgical coal sales volumes and lower costspartially offset the impact of low prices, Walter Energy said.

Cash costs as a percentage of sales for metallurgical coalfell 10.8 percent in the third quarter, Walter Energy said.

Metallurgical coal accounted for 84 percent of total coalsales volume in the third quarter, up from 74 percent a yearearlier.

The company said it expected metallurgical coal output torise in the fourth quarter from the third quarter.

Walter Energy, which also produces thermal coal used inpower generation, said in August that it was aiming to raise$250 million from asset sales over nine months. It has yet toannounce any such sales, however.

The company, with operations in North America and the UnitedKingdom, has slashed capital spending and cut its quarterlydividend earlier this year to 1 cent per share from 12.5 cents.

Walter Energy shares were up 51 cents, or 3.3 percent, at$15.88 in mid-day trading. The stock hit a high of $16.54earlier in the session.

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