Arch Coal managed to improve its metallurgical coal platform to lower costs and improve quality but still finished the quarter with a $US96.9 ($A103.9) million net loss. That was up from the $72.2 million loss it posted in the previous corresponding period.
Cloud Peak Energy, meanwhile, posted a net loss of $2.1 million, a marked turnaround from the $4.7 million net income it booked in the 2013 June quarter.
For Arch, revenues totalled $714 million for the three months ended June 30. Adjusted earnings before interest, tax, depreciation, depletion and amortisation from continuing operations was $65 million.
Arch president and CEO John Eaves said during the second quarter the company enjoyed increased shipments, higher pricing and, thanks to strong cost control, drove margin expansion in each of its operations compared to the first quarter of 2014.
“Our successful cost control efforts to date – underscored by strong operating performances at Leer in Appalachia and West Elk in Colorado – have allowed us to reduce our cost per ton expectation for those segments in 2014,” he said.
“Recently we’ve announced the idling of our Cumberland River complex in response to weak global metallurgical coal prices.
“Although idling higher-cost coking coal capacity lowers our metallurgical coal volume expectations for 2014, it also shifts our mine portfolio towards higher margin metallurgical coal operations and enhances our competitive cost position in that region.”
As of June 30 Arch had a total liquidity position of about $1.25 billion with nearly $1 billion of that in cash and short-term investments.
The company had no borrowings under its revolving credit facility at June 30 and no long-term debt maturities due until mid-2018.
Cloud Peak’s management reckons it also applied strong cost controls which improved the company’s adjusted earnings before interest, tax, depreciation and amortisation to $45.2 million, up 21% from the $37.3 million EBITDA it reported in the previous corresponding period.
The company was troubled by rail service interruptions through the quarter though, which impacted its operations.
Cloud Peak president and CEO Colin Marshall said the company nevertheless managed to control its costs and capital expenditures.
“We are continuing to work diligently with the railroad to understand their plans for improvement,” Marshall said.
“In the meantime, customer stockpiles of Powder River Basin coal are at low levels and PRB coal remains a lower cost fuel source compared to natural gas.
“We will continue to focus on controlling costs as we await improved rail service to allow us to ship our contracted tons through the rest of the year.”
Cash flow from operations was $22.6 million for the quarter.
As of June 30 Cloud Peak’s unrestricted cash and investments were $225.5 million and total available liquidity was $757 million.
During the quarter the company received permission from the Wyoming Department of Environmental Quality to self-bond and release $200 million in surety bonds held to cover reclamation obligations in accordance with Wyoming regulations.
The approval to release and self-bond is expected to save Cloud Peak $2 million a year in surety premium costs.
