NACCO Industries Inc.'s coal mining segment's second-quarter operating profit decreased, and the company expects to see a drop in coal deliveries in the second half and full-year 2019 from the year-ago periods.
Christina Kmetko, NACCO's investor relations consultant, said on an Aug. 1 call that the outlook is due to anticipated changes in customer requirements, such as the timing and duration of power plant outages, and in comparison with historically high 2018 delivery levels seen at several unconsolidated operations. NACCO delivered 1 million fewer tons in the second quarter than in the year-ago period, shipping 7.8 million tons during the recent period, according to a company release.
The company reported second-quarter consolidated net income of $8.0 million, or $1.14 per diluted share, compared with $6.4 million, or 92 cents per diluted share, in the year-ago period. Its minerals management segment was the largest driver of the company's higher net income, according to Kmetko.
NACCO expects operating profit over the next two quarters to increase because of a reduction in operating expenses and improved results from consolidated mining operations, though that will be partially offset by lower income from the unconsolidated coal mining operations, she said.
For the full year, "operating profit at the coal mining segment is expected to decrease modestly as lower income at the unconsolidated operations is expected to be partially offset by improved results at consolidated operations," Kmetko said.
The company transferred certain Centennial mine permits to third parties, resulting in a loss of $400,000, she said, but the move allowed NACCO to clear $5.4 million in reclamation obligations from its balance sheet.
NACCO's operating profit for the remainder of the year is expected to benefit from new three-year and 20-year contracts pertaining to aggregates, said President and CEO J.C. Butler.