Arch Coal Inc said quarterly profit dropped 62 percent due to weak coal demand and higher costs, and the company forecast full-year earnings well below Wall Street expectations.
Arch also said on Friday that it would cut production by as much as 15 percent this year and would reduce capital spending.
The news sent Arch shares down 4.4 percent to $14.25 in early trading on the New York Stock Exchange.
Given current weak electric generation and coal demand trends, we have elected to further reduce volume and capital spending levels in 2009, Chairman and Chief Executive Officer Steven Leer said in a statement.
In the near term, Arch is focused on controlling costs, eliminating discretionary capital programs, preserving liquidity and maintaining a strong balance sheet, he said.
While recognizing the recessionary environment of 2009, we are also positioning ourselves for an inevitable market rebound, he said.
The company cut its full-year earnings estimate to a range of 20 cents to 60 cents per share. Analysts' average forecast is $1.69, according to Reuters Estimates.
First-quarter net income was $30.6 million, or 21 cents per share, down from $81.1 million, or 56 cents per share, a year earlier, the St. Louis-based company said. Revenue fell to $681 million from $699.4 million.
Analysts, on average, had expected 24 cents per share on revenue of $682 million.
Arch sold 30.6 million tons of coal in the quarter, down from 34.3 million tons a year earlier; but it received a higher average price per ton -- $20.94 versus $18.49.
Consolidated per-ton operating costs increased by $2.66.
Earlier this year, Arch, one of the top 4 U.S. coal producers, idled some mining operations and lowered its 2009 production target to between 120 million and 127 million tons, compared with 137.8 million tons sold last year.
On Friday it lowered its production target further, to a range of 116 million to 120 million tons.
Arch said it expects to sell 1.5 million to 2.0 million tons of steel-making metallurgical coal into international and domestic markets this year, down from 4.4 million tons in 2008.
It said it was further trimming 2009 capital spending plans and now expects to spend $195 million to $215 million for capital programs and $140 million to $160 million for land and reserve additions.
It said it expects U.S. coal consumption to decline by more than 100 million tons this year due to weaker power generation trends, increased use of nuclear power, switching to natural gas, and domestic steelmakers' reduced need for coal. (Reporting by Steve James; editing by Derek Caney and John Wallace)