Walter Energy Makes Progress

In its fourth quarter earnings report, U.S.-based Walter Energy, the world’s largest publicly-traded “pure-play” met coal pro-ducer announced results that reflect cost control initiatives, aggressive production management and disciplined capital spending, in light of significantly lower global pricing levels.

Revenues were $479 million for the fourth quarter of 2012, down from $703 million in the fourth quarter of 2011 pri-marily due to reduced demand and pricing for met coal. The realized price of met coal declined 39% compared with the fourth quarter of 2011. Walter Energy reported a net loss for the quarter of $71 million. For the year, the company recorded revenues of $2.4 billion and a net loss of $1.1 billion.

During 2012, Walter Energy achieved record metallurgical coal production of 11.7 million mt and improved its cash cost per ton for met coal by 6%.

“Walter Energy made solid operational progress during 2012, in the face of chal-lenging market conditions. We safely increased our production of met coal, strengthened our senior management team and put in place a highly competitive oper-ating platform that reduced our cost of pro-duction,” said Walter Scheller, CEO, Walter Energy. “In the fourth quarter, we respond-ed to the lower pricing and demand envi-ronment by executing the strategy announced last quarter to reconfigure our Canadian operations in order to lower pro-duction and reduce costs.”

In 2012, Walter Energy sold 10.4 mil-lion mt of met coal, up 19% from 8.7 mil-lion mt in 2011. Met coal prices averaged $149/mt in the fourth quarter, a decrease of 22% from the average of $191/mt in the third quarter of 2012, and a 39% decrease compared with the $242/mt of the fourth quarter 2011. The consolidated cash cost of sales for met coal was $135/mt in the fourth quarter of 2012, as compared with $132/mt in the third quarter of 2012 and $139/mt in the fourth quarter of 2011. In the U.S. operations, the cash cost of sales for met coal was $118/mt in the fourth quarter of 2012. In Canada, the cash cost of sales for met coal was $161/mt in the fourth quarter of 2012.

Walter Energy’s emphasis on safety continues to show results as the majority of locations are achieving lower total reportable injury rates. On a consolidated basis, Walter’s total reportable injury rate decreased by 26% in 2012 as compared with 2011.

As featured in Womp 2013 Vol 03 - www.womp-int.com