Arch Coal reports sharply higher 3Q earnings
ST. LOUIS (AP) — Arch Coal Inc. said Friday that cost-control efforts helped boost its third-quarter results well above Wall Street expectations. But it cautioned that the coal industry's challenges will linger into next year.
Net income totaled $45.8 million, or 22 cents per share, in the July-September period. That compared with $8.9 million, or 4 cents per share, a year earlier.
Revenue at the St. Louis-based company fell 9 percent $1.09 billion. Adjusted income was 20 cents per share, compared with a loss of 15 cents on revenue of $1.02 billion, according to FactSet.
Shares of Arch rose 10.7 percent, or 78 cents, to close at $8.09 Friday.
Arch Coal Chief Executive John Eaves credited tightened purse strings for the company's stronger third-quarter results. He also cited modestly improved conditions in the U.S. market for coal used in electrical generation, "driven by favorable summer weather and higher competing fuel prices."
The coal industry has been battered as utilities switch from coal to cheaper natural gas. The futures price of natural gas hit a 10-year low of $1.91 per thousand cubic feet in April because of booming gas production. But a rebound in those prices lately has buoyed hopes that power plants increasingly will shift back to coal.
Eaves on Friday said he saw a bottoming out of the market for coal used to make steel. Global steel demand is constrained by the economic recession in Europe and slower-than-expected growth in China.
"We believe global coal markets are in the process of correcting," he said separately in a statement.
Arch said it shipped 37.5 million tons of coal in the third quarter. That was a decrease of 6 percent when compared with the same period a year earlier but a 19-percent jump from the second quarter.
Still, 2013 will be a difficult one for the coal industry, said Paul Lang, Arch's executive vice president and chief operating officer. But he added that "we believe our ongoing efforts will allow Arch to emerge from this cyclical downturn as an even stronger company."
Looking to keep costs in check, Arch said it expects capital spending of roughly $350 million in 2013, below its estimated range this year of $410 million to $430 million.
Arch is among many coal companies that have struggled as utilities switch to cleaner, cheaper alternatives. Arch in June announced it would lay off about 750 workers in the Kentucky, Virginia and West Virginia coalfields. Arch blamed the move on market pressures and a challenging regulatory environment that it said has pushed U.S. coal consumption to a 20-year low.
All the while, Arch said Friday, the company has pressed ahead with development of an Appalachia mine bearing metallurgical coal.