NEW YORK- Arch Coal Inc posted a second-quarter loss on Friday and cut its production target for a third time this year as weak demand and coal prices hurt sales volumes and forced production curtailments.
The loss was wider than Wall Street expected, and the company's shares fell 1.5 percent to $16.62 in early New York Stock Exchange trading.
But Arch also said it believed the coal industry had reached bottom during the current economic downturn, and it expects better business conditions for the rest of this year.
While trends remain generally soft for the broader U.S. economy and for our customers, said Chief Executive Steven Leer, we are encouraged by the swift pace of domestic coal supply rationalization, signs that the economic recession has bottomed out and recovering global and domestic steel utilization.
These trends -- along with the resumption of power demand growth -- will help improve coal market fundamentals, Leer said in a statement.
Arch, one of the Big Four U.S. coal miners, produces both steam coal, which fuels power plants, and metallurgical coal, which is a key ingredient in steel-making.
Leer said the second-quarter loss reflected the impact of four longwall moves -- major changes to coalface operations that require delays in mining -- as well as reductions in volume levels to match curtailed demand.
And despite the upbeat outlook, Arch lowered its sales volume estimate for this year to between 114 million and 118 million tons.
In April, the company had lowered its target to a range of 116 million tons to 120 million tons after earlier reducing it to between 120 million and 127 million tons. Last year Arch sold 137.8 million tons of coal.
The second-quarter net loss came to $15.1 million, or 11 cents per share, compared with year-earlier earnings of $113 million, or 78 cents per share, the St. Louis-based company said. Revenue fell to $554.6 million from $785.1 million.
Analysts on average were expecting a loss of 6 cents per share on revenue of $646.04 million.
Arch said it expected full-year earnings per share of 25 cents to 55 cents, with adjusted earnings before interest, taxes, depreciation and amortization in the $403 million to $462 million range.
Currently, analysts expect profit of 40 cents per share for 2009.
During the second quarter, Arch sold 27.4 million tons -- down from 34.4 million tons a year earlier. The average sales price fell to $19.43 per ton from $21.04 while the average cost per ton rose to $16.26 from $14.75.
Looking ahead, Arch said it would further curtail production at its West Elk mine in Colorado due to lower quality coal currently being mined. The company now expects West Elk to produce between 3.5 million and 4.0 million tons this year instead of about 6.5 million tons. (Reporting by Steve James; Editing by Derek Caney and Lisa Von Ahn)