Arch Coal Inc.'s (ACI) third-quarter profit fell 74% on
continuing demand woes, but earnings beat analysts' estimates and
the company said it thinks coal markets "are in the early stages of
recovery."
Arch also said that with its recent Jacobs Ranch acquisition
factored in, it expects to earn 28 cents to 43 cents a share in
2009 on 121 million to 125 million tons sold. Last quarter, it
forecast earnings excluding "any effect of the pending Jacobs Ranch
transaction" of 25 cents to 55 cents.
Shares jumped 4.4% in premarket trading.
Coal producers have struggled as they remain buried under record
stockpiles accumulated amid waning demand from power utilities -
coal companies' main source of revenue. In July, Chairman and Chief
Executive Steven F. Leer said he thought "the trough of the current
coal market cycle has been reached" and said he expected the
company to turn in stronger results in the second half.
Leer said Friday the company saw improvement from its
second-quarter results, noting margin expansion in each operating
segment because of cost controls and increased demand for
metallurgical coal in Central Appalachia.
Arch Coal reported earnings of $25.2 million, or 16 cents a
share, down from $97.8 million, or 68 cents, a year earlier.
Revenue fell 20% to $615 million.
Analysts polled by Thomson Reuters had most recently forecast
earnings of 4 cents on $605 million in sales.
Total tons sold dropped 16% and average sales price per ton
decreased 1.6%.
Earlier this month, Arch said it had completed the $764 million
acquisition of Rio Tinto's (RTP) Jacobs Ranch mine in Wyoming, the
third-biggest coal mine by production in the country. In 2008,
Jacobs Ranch produced 42.1 million tons of coal for sale to U.S.
power generators. Arch said it plans to integrate Jacobs Ranch into
the company's nearby Black Thunder mine, creating the biggest
coal-mining complex in the world.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com