February 17, 2015 / 6:23 PM / 3 years ago

UPDATE 2-Walter Energy forecasts drop in metallurgical coal volume

* Sees met coal sales volume falling 10 pct in 2015

* 4th-qtr revenue, net loss miss estimate

* Shares fall as much as 11 pct (Adds details from conference call, analyst comment, background, updates shares)

By Manya Venkatesh

Feb 17 (Reuters) - Walter Energy Inc forecast a 10 percent drop in sales volume of steel-making coal for 2015 due to sluggish Chinese and European demand, sending its shares down as much as 11 percent.

The company also reported a bigger-than-expected fourth-quarter loss as revenue slumped 39.5 percent, reflecting a fall in metallurgical coal selling prices and a drop in sales volumes as a result of suspending mining operations in Canada last year.

“Met coal prices remain weak and are yet to show meaningful signs of recovery,” Chief Executive Walt Scheller said on a post-earnings conference call on Tuesday.

Walter had said in April it would stop production at its Wolverine and Willow Creek mines in British Columbia and temporarily lay off about 700 employees.

The company had bought these mines as part of a C$3.3 billion acquisition of Canada’s Western Coal Corp in 2010 to take advantage of the surging global steel production at the time.

Walter said on Tuesday it expects met coal sales volume to fall to 8.5-9 million metric tons (MMTs) in 2015 from 9.7 MMTs in 2014.

Sales volume fell to 2 MMTs in the fourth quarter ended Dec. 31 from 2.9 MMTs a year earlier.

“At least in the first half, we don’t see a significant turnaround,” CRT Capital Group analyst Amer Tiwana said. “It seems as though pricing may be stabilizing, but for the company to survive, pricing would need to rebound.”

Walter suspended its quarterly dividend last month to improve “financial flexibility”. Rival Arch Coal Inc has also suspended its dividend, while Peabody Energy Corp slashed its payout.

Walter’s cost of sales fell 26.5 percent to $275.2 million in the fourth quarter, while operating costs declined 20 percent.

The company posted a quarterly loss of $1.97 per share on an adjusted basis, bigger than analysts’ average estimate of $1.59, according to Thomson Reuters I/B/E/S.

Revenue of $285.6 million was also well below an estimated $326.6 million.

Walter’s shares were down 7 percent at $1.01 in afternoon trading on the New York Stock Exchange, after touching a low of 97 cents. They had fallen about 90 percent in the 12 months through Friday. (Additional reporting by Kanika Sikka in Bengaluru; Editing by Simon Jennings and Joyjeet Das)

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