International Coal Group returns to profit in 2Q

Soaring prices and a big gain on a swap of coal reserves pushed International Coal Group back to profitability in the second quarter.

Scott Depot-based ICG said Wednesday it earned $12.6 million, or 7 cents per share, in the three months that ended June 30. ICG lost $10.2 million, or 7 cents per share, in the same period of 2007.

The second quarter 2008 results include a $22.9 million pretax gain on an exchange of eastern Kentucky coal reserves that was completed in June. The swap increased total reserves by approximately 1 million tons, ICG said.

Analysts polled by Thomson Financial had expected ICG to earn 3 cents per share on average.

ICG reaped big benefits from coal prices that have more than doubled over the past year. While coal sales increased about 9.3 percent in the quarter, revenue jumped 34 percent to $277.9 million, compared with $208.1 million in second-quarter 2007.

ICG reached agreements to sell 5.1 million tons at an average of $105 a ton during the quarter, Chief Executive Ben Hatfield said in a statement. Most of those contracts were for steam coal used by electric generating plants.

The company also increased guidance on sales and prices for this year and 2009, as well as offering its first guidance on prices for 2010.

ICG now expects prices to average $51.18 a ton on sales of 19.7 million tons in 2008, up from a first-quarter prediction of $48.50.

ICG says it has committed to sell 17.9 million tons, or 80 percent of projected shipments, at an average price of $58.55, up from $52.10 in the first quarter. About 39 percent of projected 2010 shipments have been committed and priced at an average of $56.31 per ton, ICG said.

Returning to profitability was a bit of good news for ICG, which has struggled with mounting losses despite rising coal prices.

"Both our operating and financial performance improved significantly in the second quarter," Hatfield said. "June results were the best in our company's brief history."

ICG controls approximately 1 billion tons of coal reserves in Illinois, Kentucky, West Virginia, Maryland and Virginia. Its stock closed down 66 cents, or 7.04 percent, at $8.71 Wednesday.