* Q3 profit of $0.20 vs estimated loss
* Expects 2013 capex of about $350 million
* Shares up as much as 13 percent premarket
Oct 26 Arch Coal Inc, one of the world's
top five coal producers, surprised Wall Street on Friday with a
third-quarter profit as cost cuts paid off, and the company said
thermal coal shipments were improving.
Arch Coal shares rose as much as 13 percent premarket.
The company, which supplies thermal coal for power
generation and metallurgical coal for making steel, shipped 37.5
million tons of coal in the third quarter, up 19 percent from
the second quarter.
"Global coal markets are in the process of correcting, with
the domestic thermal market building some momentum while
metallurgical markets are bottoming out," Chief Executive John
Eaves said in a statement.
Larger rival Consol Energy Inc said on Thursday U.S.
thermal coal markets were bouncing back as natural gas
was getting costlier and a normal winter was likely. Peabody
Energy Corp's profit topped estimates last week.
Arch Coal said it was matching production levels to demand,
reducing costs and lowering capital spending. Coal miners have
been forced to cut production, especially in the high-cost
Appalachian region, because of weak prices.
The company expects 2012 thermal coal sales volume of 129
million tons to 135 million tons, slightly above its previous
Arch Coal expects capital spending of about $350 million for
2013, at least 15 percent below estimated 2012 capital spending
of $410 million to $430 million.
"We need another 20 million tonnes of cutbacks in the U.S.
to bring supply and demand into balance, with 5 million-10
million of these cutbacks coming from metallurgical coal,"
Global Hunter Securities' metals & mining analyst Atwell Wayne
said in a note on Thursday.
Arch Coal's third-quarter net profit jumped five-fold, while
its revenue fell 9 percent. Excluding items, profit was 20 cents
Analysts on average had expected a loss of 16 cents per
share on revenue of $1.01 billion, according to Thomson Reuters
Shares of St Louis-based Arch Coal have halved in value in
the past year, compared with a 27 percent fall in the Thomson
Reuters United States Coal Index.