Arch Coal Q2 Tops Estimate, Stock Up - Update

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7/27/2012 1:11 PM ET

Arch Coal Inc. (ACI: Quote) said Friday it slipped to a loss for the second quarter as it incurred mine closure and impairment charges amid persisting weakness in U.S. coal demand. Quarterly sales increased from last year on higher prices, but volumes slid. Nonetheless, loss per share for the quarter much smaller compared to Street estimates, while revenues topped expectations.

Moving forward, Arch Coal said that though the U.S. domestic demand is waning, improved exports and robust demand from Asian giants such as China and India augurs well for the company. It also reaffirmed its thermal coal sales volume for the full year.

Investors were impressed with the results and Arch Coal shares are currently gaining 16 percent in afternoon trade on the New York Stock Exchange.

Arch Coal's quarterly results were impacted by mine closure and related charges of $525.8 million. The company closed four thermal coal mining operations and idled an additional thermal mine in Appalachia during the quarter.

Its sales volumes for the quarter fell to 31.5 million tons from 36.7 million tons a year ago. Average sales price per ton improved to $28.44 from $24.67, but increased costs saw margin per ton drop to $1.87 from $4.86.

St. Louis, Missouri-based Arch Coal reported second quarter net loss of $435.5 million or $2.05 per share, compared to net income of $6 million or $0.04 per last year. Excluding items, loss for the quarter was $22 million or $0.10 per share, compared to earnings of $76.6 million or $0.44 per share a year ago.

On average, 27 analysts polled by Thomson Reuters a loss of $0.18 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter were $1.06 billion, compared to $985.5 million a year ago. Analysts expected revenues of $997.98 million.

For the full year 2012, Arch Coal maintained its thermal coal volume guidance range of 128 million to 134 million tons. The company said it expects shipping at slightly higher volume levels in the second half 2012.

ACI is trading at $6.24, up $0.98 or 18.63%, on a volume of 19.6 million shares.

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by RTT Staff Writer

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