Arch Coal says depressed demand for coal and production cuts hurt the company's second-quarter results -- but hastens to add that it envisions a rosy future for coal, sending its stock higher in morning trading.
On Friday, Arch Coal ( ACI) said the decreasing demand for coal and subsequent cuts in production hit the company during the second quarter, sending Arch swinging for a loss. Arch reported a loss of $15.1 million, or 11 cents per share, compared to a net income of $113 million, or 78 cents, in the year-ago period. Revenues also fell by 29% during the same period to $554.6 million. The street expected a loss of 6 cents per share on revenues of $634.6 million, according to analysts polled by Thomson Reuters. The Missouri-based concern said the volume of coal sold fell by a brisk 20%, or from 34.4 million tons in the year-earlier quarter to 27.4 million tons this quarter. Despite the results, Arch attempted to strike an upbeat note about coal's future prospects. "Looking ahead, we are positioning the company to capitalize on the inevitable rebound in coal demand," CEO Steven Leer said in a press release. "A growing U.S. population and rising GDP will increase power demand, while ongoing rationalization of high-cost coal mines should lead to a healthier supply equation. "New coal plants that start up in the next 40 months will also boost domestic coal demand by an estimated 55 million tons annually," he added. "Additionally, a sustainable U.S. coal export market could develop as global coal consumption growth has continued to outpace growth in other fuels since 2000."