Arch Earnings Triple on Soaring Coal Prices
By Jeffrey Tomich, St. Louis Post-Dispatch
Jul. 25–Shares of Arch Coal Inc. soared Friday after the nation’s No. 2 coal producer reported second-quarter profit that exceeded Wall Street expectations and raised its earnings outlook for the year.
Net income more than tripled to $113 million, or 78 cents a share, from $37.6 million, 26 cents, in the same quarter a year ago, Creve Coeur-based Arch said in a statement. Sales rose 31 percent to $785.1 million as demand for fuel to run power plants and make steel outpaced the availability of new supplies.
“Given tight supply conditions and strong demand for coal globally, we have reached price levels that are unprecedented,” Arch President and Chief Operating Officer John W. Eaves said in the statement. “At the same time, we believe these strong pricing levels are sustainable over the next several years.”
Arch’s operating margins, a key measure of profitability, more than doubled on the increase in coal prices. The sharpest increase in prices came in central Appalachia where the average price rose 44 percent to $69.54 a ton because of strong export demand.
Coal shipments increased 3 percent to 34.4 million tons following the startup last fall of the Mountain Laurel mine in West Virginia.
Arch forecast 2008 earnings of $2.50 to $2.85, an increase from the range of $2.40 to $2.80 provided in April.
Shares of Arch rose $4.11, or 8 percent, to $55.05 as of 1:05 p.m. in New York Stock Exchange composite trading. They have risen 24 percent this year.
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