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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (36057)	4/24/2009 9:38:54 PM
From: LoneClone	Read Replies (1) \| Respond to of 196200

Arch Coal's 1Q profits tumble; issues dour outlook Friday April 24, 5:17 pm ET By Jim Suhr, AP Business Writer ca.us.biz.yahoo.com Arch Coal's 1Q profits slump; issues guidance well below street consensus ST. LOUIS (AP) -- Arch Coal profits fell more than 60 percent in the first quarter with power demand from steelmakers and other manufacturers evaporating. The company warned Friday of a potentially "ugly, ugly year" and released guidance well below Wall Street expectations. The company's long-delayed earnings outlook for 2009, combined with disappointing profit numbers for the first three months of 2009, sent Arch shares sliding 10 percent. Arch also announced it would slash production further in anticipation of weak demand. The quarter saw "the worst global economic contraction we have ever experienced," said Steve Leer, Arch's chairman and chief executive. "We believe our outlook presents a sober view of this perfect storm," said Leer, warning that "this recession is going to be deeper and perhaps longer than any we've experienced in the last 20 or 30 years." Arch Coal Inc., which in January withheld its full-year earnings guidance, said it now expects to earn 20 to 60 cents per share this year -- a forecast Dahlman Rose & Co. analyst Daniel Scott cast as "particularly troubling." Analysts surveyed by Thomson Reuters were expecting $1.67 per share. Last year, Arch earned $2.45 per share. Shares of Arch tumbled $1.32, or 8.9 percent, to close at $13.59 as analysts rethought earlier forecasts. Coal companies have been reluctant to release guidance because of the shaky global economy, and Arch caught some analysts off guard Friday. "While management may be deliberately providing numbers it feels it can beat in the end, these earnings ranges are particularly troubling," Scott wrote in a research note. Arch also said it was paring its expected U.S. output this year by an additional 4 million to 7 million tons, down from the 120 million to 127 million tons the company had forecast in January. Arch also said it would cut costs further. With major industries from appliance to automobile makers cutting back on power usage, coal sales have been hurt badly. Coal from Arch fuels about 6 percent of all U.S. electrical generation. Arch reported net income of $30.6 million, or 21 cents per share, for the three months ended March 31, down from $81.1 million, or 56 cents per share, a year ago. Revenue fell to $681 million, from $699.4 million last year. Analysts surveyed by Thomson Reuters expected, on average, a profit of 24 cents per share on revenue of $680.5 million. While crediting Arch with having a "decent" first quarter that narrowly missed analysts' consensus estimates, Natixis Bleichroeder analyst Jeremy Sussman called the company's outlook "very disappointing." Performance for coal companies so far this year has been mixed. St. Louis-based Peabody Energy's first-quarter earnings fell well short of Wall Street's expectations. Peabody again declined to offer a full-year financial outlook, citing the unstable global economy. On Thursday, Pennsylvania-based coal miner Consol Energy said its first-quarter earnings more than doubled on higher coal prices and stronger natural gas production, handily beating Wall Street's expectations. Arch, however, said it was laying the groundwork for when the economy recovers. "Arch continues to manage its business effectively and profitably in a severe U.S. economic recession and depressed coal markets," Leer said. "While recognizing the recessionary environment of 2009, we are also positioning ourselves for an inevitable market rebound." The company sold 30.6 million tons of coal in the first quarter, down from 34.3 million tons the same period a year ago. Each ton Arch sold fetched on average $20.94, up from $18.49 in last year's first quarter. The company said it sold 4 million tons of coal from its central Appalachia region for an average of $28.11 per ton, compared with 5.1 million tons that on average fetched $26.76 a ton over last year's first three months. In announcing its widening production cuts, Arch said it would idle a dragline and shovel at its Black Thunder mine in Wyoming. Arch also said it expects three longwall moves in Utah and one in West Virginia to affect its showing during the unfolding second quarter, as well as "reduced sales volume levels across the company's operating platform." Arch assumes "this is going to be an ugly, ugly year and we're gonna take a sober view of it," Leer said. "I hope we see signs of a turn in June, but I don't think that's very likely." Arch Coal Inc., archcoal.com