In its second quarter, Arch’s profit was $US37.5 million, a 46% fall over last year’s same-period results of $69.6 million. The company cited higher costs related to planned volume reductions.
Revenue was also down to $598.7 million, a 6% drop over the $637.5 million the company reported in 2006.
“Arch Coal delivered solid operating results in the second quarter of 2007, especially considering the softness experienced in US coal markets,” said Arch chairman Steven Leer.
“While conditions were less favourable than during the year-ago period, US coal markets began to strengthen in the second quarter.
“We believe coal markets are likely to continue to improve as the year progresses, as evidenced by many positive catalysts that suggest a better supply and demand balance in domestic coal markets by year end.”
Leer cited three longwall moves at the producer’s “western bituminous mines” for its operational performance, adding that it also saw higher unit costs.
“Despite these challenges, our operations performed well as we continued to focus on maintaining production flexibility at our mines,” he said.
Looking forward, Leer noted that capitalising will be key for the company.
“Arch is particularly well positioned to capitalise on improving market fundamentals during the second half of this year and beyond,” he said.
“[We] will continue to execute a market-driven strategy in an effort to match our production and capital spending programs with market demand … [we] believe this focused strategy will result in superior shareholder returns over the long term.”
Earlier this year and within the company’s second quarter, it divested its Mingo Logan Ben Creek operation in a $43 million deal with Alpha Natural Resources. The transaction, which included the operation as well as ancillary equipment and an estimated 9.2 million tons of reserves, was completed in late June. ANR said last month the new assets will be a holding of the recently developed Cobra Natural Resources.
“The Mingo Logan transaction was specifically timed to coincide with the depletion of the longwall reserves at this operation,” said Arch.
“The divestiture of this once core asset also effectively offset higher mine operating costs associated with challenging conditions faced in the final longwall panel and the wind-down costs of the longwall operation during the quarter.”
