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To: LoneClone who wrote (36463)	5/1/2009 7:29:01 PM
From: LoneClone	Read Replies (1) \| Respond to of 193918

UPDATE 2-James River Coal Q1 profit beats Street, shares soar Fri May 1, 2009 1:10pm EDT reuters.com * Q1 EPS $1.03 vs est $0.81 * Q1 rev up 39 pct * Q1 helped by higher CAPP average sales price * Says amended existing CAPP utility contract * Shares up 26 pct (Adds conference call details, analyst's comments, share movement) By Antonita Madonna Devotta BANGALORE, May 1 (Reuters) - James River Coal Co's (JRCC.O) quarterly profit beat expectations, boosted by a 73 percent jump in the average price of Central Appalachian coal (CAPP), but said it would cut production due to the softness in coal demand. The results pushed James River's shares up 26 percent and triggered a rally in coal stocks like Walter Industries Inc (WLT.N), Alpha Natural Resources Inc (ANR.N), International Coal Group Inc (ICO.N) and Foundation Coal Holdings Inc (FCL.N). The broader Dow Jones coal index .DJUSCL rose 10 percent. CAPP average sales price rose to $90.91 per ton, compared with $52.56 per ton in the year-ago quarter, driven by new contracts signed by the company in 2008. For the first quarter, James River swung to a net profit of $28.2 million, or $1.03 a share, compared with a net loss of $16.7 million, or 78 cents a share, a year earlier. Revenue at the Richmond, Virginia-based coal producer rose 39 percent to $192.1 million. "In response to the weak coal markets, we are continuing to adjust our production through small changes to our work schedules for the remainder of 2009," Chief Operating Officer C.K. Lane said in a statement. In a conference call with analysts a company executive said James River cut production on Saturdays, stopped purchase of coal and idled most of its contract mines. It also plans to reduce capital expenditure as part of its cost-savings. Demand for U.S. coal domestically and in the export market has diminished and prices have fallen as a worldwide economic slowdown has cut demand for electricity, steel and cement -- all of which are produced using coal. HOLDS PRICING POWER? "Our strong contract position for the next several years and flexible mine operations give us the option to decline low-priced offers and wait for the market to properly reflect our costs and the value of our coal," COO Lane said. For 2009, the company has about 6.7 million tons of coal priced at $89 per ton. It lowered the price of a 700,000 ton contract to $70 from $108 and will re-adjust the amount for supplies in 2010-12. "The company... essentially gave up a little value on its 2009 contracts in order to get more value in 2010-2012. This is a strategy that we think makes a lot of sense for the company," said analyst Jeremy Sussman of Natixis Bleichroeder. "This should help discount any theory that James River is just a 'one-year wonder'," the analyst added, referring to the company's contract position for 2009 and 2010. James River Coal, which operates in the Central Appalachian basin of the United States, mines and sells bituminous, steam and industrial-grade coal in Kentucky and Indiana. Shares of the coal producer were up 22 percent at $17.43 in mid-day trade Friday on Nasdaq. They touched a high of $17.88 earlier. (Additional reporting by Shradhha Sharma in Bangalore; Editing by Ratul Ray Chaudhuri)