- Associated Press - Tuesday, February 4, 2014

ST. LOUIS (AP) - Arch Coal reported a wider fourth-quarter loss as weak coal prices and rail service issues cut into the margins at one of the world’s biggest coal producers.

But the St. Louis company, while intent on more belt-tightening this year, said better times are ahead, envisioning a comeback in one of the industry’s most difficult periods on record.

Company shares rose 12 cents, or about 3 percent, to $4.13 early on Tuesday.

Arch lost $371.2 million, or $1.75 per share. Adjusted for one-time items, losses were 45 cents per share - worse than the loss of 39 cents that analysts had been expecting. During the same period a year ago, Arch lost $295.5 million, or $1.39 per share.

Revenue slid 17 percent to $719.4 million, from $867 million a year ago.

Analysts polled by FactSet expected revenue of $767 million.

For all of 2013, Arch lost $641.8 million, or $3.03 per share, on revenue of $3.01 billion. That’s bigger than last year’s loss of $684 million, or $3.24 per share, on $3.8 billion in revenue.

Arch Coal Inc. expects to sell 131.5 million to 142.5 million tons of coal this year - in line with the 139.6 million tons produced in 2013 - as the company continues cutting costs, though it anticipates rising demand for the thermal coal used by power plants.

The price for futures of natural gas, the main alternative fuel used by utilities to generate power, spiked more than 7 percent Tuesday as the second wave of a major cold snap spreads across portions of the country.

A technological revolution in drilling for natural gas, which has made it extraordinarily cheap, has thrashed the coal industry.

“We will remain focused on what we can control - costs, capital spending and sales commitments,” said CEO John Eaves. “With signs that a rebound in U.S. thermal coal demand and pricing may be forthcoming, we are managing our operations in a manner that will enable us to benefit from that rebound.”

Arch’s $297 million in capital spending last year was down nearly $100 million, and the company said it expects to dole out less than $200 million on such projects in 2014.

While calling Arch’s fourth-quarter performance and its 2014 forecast “weak,” Citi analyst Richard Yu said “liquidity remains solid and the company continues to focus on what it can control.”



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