Arch 4Q Profits Up, But Cuts Production

ST. LOUIS (AP) — Better prices boosted net income at Arch Coal by 48 percent in the fourth quarter, but that was still shy of Wall Street expectations and shares slid more than 3 percent after the company followed its peers Friday in announcing coal production this year.

Natural gas prices are falling so fast that many utilities are switching over to take advantage of the cost savings. As recently as November, Arch said it would be scaling back production at its Dugout Canyon mine in Utah, where it cut 114 jobs.

Already, rivals Patriot Coal and Alpha Natural resources have shut down mines to protect prices that have been hit hard both by falling natural gas prices, as well as falling demand for electricity.

"Near-term market conditions have softened and we are reducing our planned production volumes to better align with weak generation and coal demand trends," said Chairman and CEO Steven Leer. "These actions preserve our reserve base and increase our flexibility to respond as global and domestic energy markets evolve."

The St. Louis miner earned $70.9 million, or 33 cents per share, up from $47.8 million, or 29 cents per share, in the same quarter last year.

Excluding acquisition-related costs associated with the company's purchase of International Coal Group, along with amortization of acquired coal supply agreements, the company said it posted an adjusted profit of 29 cents per share for the recent quarter.

That acquisition sent revenue spiking 47 percent to $1.23 billion from $835.4 million.

However, Wall Street was looking for per-share earnings of 33 cents and revenue of $1.3 billion, according to a FactSet poll.

For the full year 2011, Arch Coal earned $141.7 million, or 74 cents per share, up from $158.9 million, or 98 cents per share, in 2010. Revenue rose to $4.29 billion from $3.19 billion.