* Metallurgical coal markets to remain challenging this year
* Q4 adjusted loss 45 cts/shr vs estimate 39 cts
* Revenue falls 17 pct to $719.4 mln
Feb 4 U.S. coal miner Arch Coal Inc
reported a bigger-than-expected quarterly loss due to weak
shipments and prices, but said markets for thermal coal, used to
generate power, are improving.
Arch shares were up nearly 1 percent at $4.05 at midday
after declining immediately after releasing results. They soared
5 percent during a conference call with Wall Street analysts.
On the call, Chief Executive Officer John Eaves said he
anticipated "a much more balanced and dynamic market in 2014"
for thermal coal.
Abundant U.S. shale gas supplies and low prices for natural
gas had prompted power producers to switch to natural gas from
coal. But recently the trend has reversed due to a rise in
natural gas prices and increased power demand after a
particularly frigid winter in much of the United States.
"Electricity generating capacity is feeling a bit stressed,"
Eaves said, adding that prices for thermal coal from its Powder
River Basin mines in Wyoming were improving.
Kristoffer Inton, an analyst with Morningstar Inc, said Arch
would also benefit from lower costs at its Appalachian
operations and from refinancings late last year that pushed
major maturities out to 2018.
"The company has four years to wait for better coal
markets," Inton said. "They are doing everything that they can."
The company also produces metallurgical coal used in
steelmaking. That market is expected to be weak for most of this
year, Eaves said, as global supplies outstrip demand and keep
Arch expects to sell between 131.5 million and 142.5 million
tons of coal in 2014.
The company sold 139.6 million tons last year.
In the fourth quarter, Arch said rail service disruptions
hurt shipments of thermal coal from the Powder River Basin
mines. The company did not specify the cause for the
Total sales volumes fell nearly 16 percent in the quarter
ended Dec. 31, from the third period.
The weak prices led to a loss for the eighth quarter in a
Arch's net loss widened to $371.2 million, or $1.75 per
share, from $295.4 million, or $1.39, a year ago.
On an adjusted basis, the loss was 45 cents per share.
Analysts, on average, expected a loss of 39 cents, according
to Thomson Reuters I/B/E/S.
Revenue fell 17 percent to $719.4 million, below the average
analyst estimate of $764.44 million.