ICG Q4 loss widens, to cut capital expenses

CHARLESTON, W.Va. - International Coal Group Inc said it will sharply reduce its capital expenses this year after reporting losses for the fourth quarter and full year 2008 on Wednesday.

The Scott Depot-based mine operator said it lost $37 million, or 24 cents per share, in the period ending Dec. 31. ICG lost $16 million, or 11 cents per share, in fourth quarter 2007.

Analysts polled by Thomson Reuters had expected ICG to lose 6 cents per share in the quarter

Fourth-quarter revenues rose 26 percent to $257.7 million, compared to $205.0 million a year earlier. But quarterly revenues were depressed by the loss of higher-priced sales, particularly metallurgical orders, said Ben Hatfield, ICG's president and chief executive.

"The global economic crisis came to bear heavily on the coal industry in the fourth quarter, as many steel companies suspended metallurgical coal shipments across the board and utilities responded to sagging electricity demand by halting spot coal purchases," Hatfield said.

For the full year, ICG said it lost $24.7 million, or 16 cents per share, on revenue of $1.1 billion. The company lost $35.6 million, or 23 cents per share, on revenue of $849.2 million in 2007.

Coal sales totaled 18.9 million tons in 2008, compared with 18.3 million tons in 2007, ICG said.

ICG said it expects to sell 20.5 million to 21.3 million tons of coal in 2009 and is "sharply reducing" its capital expenses to about $100 million.

While Hatfield said he believes the long-term outlook for coal demand remains positive, "we have taken decisive steps to help insulate our business from the effects of reduced worldwide demand for coal by aggressively cutting capital spending, delaying expansion projects, conserving liquidity, and matching lower-cost production to existing demand," he said.

ICG said it idled about 600,000 tons of high-cost coal production in eastern Kentucky earlier this year and further production cuts will be considered later this year based on market conditions.

ICG said that until conditions improve, it is does not expect to resume construction until 2011 on its planned Tygart No. 1 mine in Taylor County, whose site development has been suspended pending approval of a modified permit.

West Virginia's Surface Mine Board overturned a permit for the mine in October, ruling the state Department of Environmental Protection approved an inadequate water-treatment plan that improperly considered potential acid drainage.

Tygart has been a cornerstone of ICG's future plans. The company had told investors the mine, which is expected to cost close to $300 million, would yield approximately 3.5 million tons of coal annually and employ 350 people at full production.

ICG operates mines in West Virginia, Kentucky, Maryland, Virginia and Illinois.

Its stock rose 6 cents, or 2.2 percent, to $2.74 Wednesday in the regular trading session. They fell 21 cents, or 7.7 percent, in after-hours trading.

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