NEW YORK (AP) -- Shares of Walter Energy Inc. rose Thursday after the coal company said that its first-quarter coal production was higher than it expected.
THE SPARK: The company, which produces metallurgical coal for the steel industry, said Wednesday that its first-quarter coal production was 3 million tons. That beat the company's outlook for production of 2.8 million to 2.9 million tons, and set a new quarterly record.
The higher production helped boost revenue, but Walter Energy said its profits still fell sharply from the year before as higher costs contributed to losses in its Canadian and British operations. Operating costs were also higher in the United States, squeezing profit margins.
In the quarter ended March 31 Walter Energy earned $40.6 million, or 65 cents per share, compared with $81.8 million, or $1.53 per share, a year earlier.
Revenue rose to $631.6 million from $408.7 million, helped by the acquisition of Western Coal and greater sales of hard coking coal. Analysts had been expecting net income of 80 cents per share on revenue of $644.8 million, according to FactSet.
THE ANALYSIS: Citigroup analyst Brian Yu suggested that the higher first-quarter production could help boost Walter Energy's results going forward.
Yu said the strong production could help Walter Energy meet its full-year goal of producing between 11.5 million tons and 13 million tons of coal.
Yu said there were some signs that prices could be more favorable for that coal. He said prices in Canada were higher than he expected during the first quarter. He rated the company's stock a "Buy" with a $80 price target.
SHARE ACTION: The company's shares rose $2.19, or 3.4 percent, to $65.98.