James River Coal (JRCC) plunged 16% on Tuesday after Standard & Poor�s downgraded its corporate credit rating to CCC+ from B- on Monday.
In the downgrade report, Standard & Poor�s analyst Megan Johnson cited a weakening coal market, which was bolstered by the warmer-than-usual winter.
�In addition, fewer production disruptions in Australia and slowing demand in China and the eurozone have caused metallurgical (met) coal prices to decline, further pressuring James River Coal’s performance,� wrote Johnson. �Based on our expectation that coal markets will be weaker through 2013, we believe that the company’s liquidity is likely to deteriorate.�
New regulations and the decision to switch to natural gas by several power plants have put demand for coal on the backburner recently and the effect has been felt throughout the sector. On Tuesday, Patriot Coal (PCX) was also down 11.9% and Arch Coal (ACI) fell 6.4%.
On May 3, James River reported first-quarter 2012 operating results that included a net loss of $15.7 million or 45 cents per fully diluted share for the first quarter of 2012 compared to net loss of $7.6 million or $0.28 per fully diluted share for the first quarter of 2011.
James River slid to its 52-week low of $1.90 a share on June 13.
– Grace L. Williams
No comments:
Post a Comment