CRN -6.64% disappointed the market today on patchy quarterly results. The business has stumbled operationally and also mentioned a short term dip in steel demand which weighed on metallurgical coal prices during the period.
Notable figures from the quarterly:
- Coal production of 6.3 million tons, -15% from the prior quarter
- Saleable coal production 3.8 million tons, -7.3% from the prior quarter
- Quarterly revenue $608.2 million vs. $673m quarter prior
- 9-month revenue $1.95 billion, -12% from a year prior
Importantly, CRN reaffirmed saleable coal production forecast for the full year. We note that global electrification will require copious amounts of steel, plus the AI revolution needs huge amounts of energy – both tailwinds for coal. This is a disappointing operational update in the short term, we still believe in the long term met coal thematic and so don’t see reason to sell at this stage. We continue to hold the stock in the Emerging Companies Portfolio but will be monitoring the operational performance of the business closely.
MM remains long and bullish CRN
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