Walter looks at taking goodwill charge due to lousy coal market

Walter Energy (NYSE: WLT) (TSE: WLT), a major producer of metallurgical coal in Alabama, West Virginia and western Canada, announced Oct. 26 that it is anticipating a third quarter non-cash goodwill impairment charge. 

“As a result of changes in the global outlook for met coal and recent weakness in worldwide demand, the Company is performing an interim goodwill impairment test based upon decreased equity market valuations,” Walter said in a brief statement. “Preliminary indications are that all or substantially all of the Company’s $1.1 billion of goodwill could be impaired and a corresponding non-cash charge recognized in third quarter financial statements.”

The international met coal market, led by a slowdown in China demand, has been slumping lately, with the fourth quarter international coking coal benchmark price falling to $170/tonne. Some producers, like Canada’s Teck Resources, think there are early signs of a rebound starting to happen.

Walter calls itself the world’s leading, publicly traded “pure-play” metallurgical coal producer, with strategic access to high-growth steel markets in Asia, South America and Europe. The company also produces thermal coal, anthracite, metallurgical coke and coal bed methane. Walter employs approximately 4,400 employees and contractors with operations in the United States, Canada and the United Kingdom.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.