Consol earnings down 95 percent
Consol Energy Inc. reported a 95 percent decline in first quarter profits, and said Thursday it expects to cut its work force by about 1,600 miners by the end of the year, up from earlier estimates of about 1,300. About half will come from previously announced closings of four mines, including one in Pennsylvania.
Last month, Upper St. Clair-based Consol said it was scaling back coal production by 5-6 million tons because of slumping demand, the aftermath of an unseasonably warm winter.
Yesterday, Consol said first quarter net income was $5.5 million, or 7 cents per diluted share, down from $100.8 million, or $1.27 cents a share, in the same period a year-ago.
"Clearly, this was not a good quarter," said William J. Lyons, chief financial officer for Consol, during a conference call with securities analysts yesterday. "We knew the market was soft, but we hoped February and March would be cold. Our January outlook proved to be far too optimistic. But we reacted, and we're pleased at how the actions we've taken have positioned the company for the rest of the year. The energy market will rebound, and we expect it to be reflected in our earnings."
Consol's stock closed at $25.01 yesterday, down 9 cents.
About 850 to 900 of the 1,600 jobs will be lost by the mine closings. The rest of the cuts will be achieved by eliminating flexible scheduling and returning to traditional five-day work weeks and cutting shifts from three to two, according to Thomas F. Hoffman, Consol spokesman.
"Some of the changes we're making are short-term in nature. If things improve, there's a chance some could be called back. But for the vast majority, the layoff will be permanent," Hoffman said.
Total coal sales for the quarter fell to 17.4 million tons, down from 20.4 million tons one year earlier. The company's sales of natural gas from its coal beds were also hurt by mild weather, as gas prices for the quarter were $2.62 per million Btu, down from $6.75 in the year-earlier period.
Consol officials said utility companies have enough coal stockpiled to last 45 to 47 days, above normal levels for this time of year, and have asked the company to delay planned shipments of contracted coal. Coal-burning utility customers include Allegheny Energy Inc., based in Hagerstown, Md.
The Pennsylvania mine slated to close is the Dilworth Mine in Green County, which Consol acquired from U.S. Steel Corp. in January 1984. The mine employs an hourly work force of about 360 miners, who are represented by Local 1980 of the United Mine Workers union. Although Dilworth is the company's sixth-largest mine and produces about 3.5-4 million tons annually, Consol said reserves that can be mined economically are depleted.