Consol Energy's Q3 net income doubles year-over-year to US$167.3M, revenue up to US$1.52B, from US$1.35B a year ago, on higher coal prices
October 27, 2011
– Higher coal prices help Consol Energy more than doubles 3Q profit, company boosts dividend
Rising coal prices doubled profits at Consol Energy during the third quarter and the company raised its shareholder dividend by 25 percent Thursday.
Shares jumped 10 percent with Consol surprising Wall Street with its profits and the revenue it generated on strong demand, especially for its metallurgical coal, which is used to make steel.
And for the second consecutive quarter, the company generated more cash from its met coal than from thermal coal, which is used at power plants.
Prices for both types of coal, however, rose during the quarter, Consol said.
Net income was $167.3 million, or 73 cents per share, compared with $75.4 million, or 33 cents per share, a year earlier.
Revenue rose to $1.52 billion from $1.35 billion.
Analysts surveyed by FactSet expected the company to earn 68 cents per share on revenue of $1.40 billion.
Profit margins on coal rose by about half, to more than $20 per ton. Demand for coal used in steel-making has been buoyed by demand in China and other developing countries.
The company met its coal-production expectations and Chairman and CEO J. Brett Harvey raised the outlook on exports for the entire year.
Consol is also making a bigger push into natural gas production in the Marcellus shale in Pennsylvania through joint ventures with Noble Energy and Hess Corp. However, gas profits fell along with the company's sales price for gas.
While natural gas volumes rose 13 percent, margins fell with an 80 cent slide in realized prices.
However, Consol said costs declined because of larger proved reserves. That trend is expected to continue, Consol said, as the company escalates its work in the Marcellus Shale.
The Marcellus Shale joint venture with Noble closed on Sept. 30, so it was included in third quarter results. The Utica Shale joint venture with Hess Corporation closed on Oct. 21, and will be reported in fourth-quarter results.
Consol raised its annual dividend to 50 cents per share. It said a quarterly payout of 12.5 cents per share will be made Nov. 25 to shareholders as of Nov. 11.
Consol Energy Inc. is based in Canonsburg, Pa., about 20 miles southwest of Pittsburgh.
Company shares rose $3.93 to $44.93 in afternoon trading.
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