ST. LOUIS (AP) — Arch Coal Inc. said Tuesday that its first-quarter loss widened as weaker prices and demand cut into its margins, prompting the mine operator to shave its outlook for shipments of coal used in making steel.
The loss was bigger than analysts had expected, and its shares tumbled by more than 8 percent in afternoon trading Tuesday.
While saying markets for "thermal" coal used by power plants appear to be strengthening, John Eaves, Arch's president and chief executive, said steelmakers' demand for coal remains "soft," prompting the company's lowering by about one million tons its sales outlook for such so-called metallurgical coal.
Arch now forecasts shipping 6.3 million to 7.3 million tons of metallurgical coal this year, down from its February outlook of 7.5 million to 8.5 million tons. The company lowered by 2 million tons the upper end of its previous guidance on sales this year of thermal coal, saying it now expects to sell 124 million to 132 million of that type of coal.
"As expected, our first-quarter results reflect a challenging global metallurgical coal market and the impact of rail performance issues," Eaves said. "At Arch, we are taking proactive steps to manage our controllable costs and capital spending, reduce our cash outflows and preserve our liquidity."
St. Louis-based Arch, among the world's biggest coal producers, said it lost $124.1 million, or 59 cents per share, in the first three months of the year. That's up from a loss of $70.5 million, or 33 cents per share, during last year's January-through-March period.
The company's revenue slipped to $736 million, slightly below $737.3 million a year ago.
Analysts polled by FactSet expected a loss of 43 cents per share on revenue of $711.4 million.
Shares of Arch Coal tumbled 42 cents, or 8.6 percent, to $4.55 in afternoon trading Tuesday.
Intent on streamlining, Arch earlier this year sold what it called "non-strategic assets" in Appalachia, including a Kentucky operation that produced coal used for creating electricity.
Arch is the industry's first big player to report its first-quarter financial performance, giving analysts and investors a snapshot of the industry's health. Peabody Energy Corp., the world's biggest private-sector coal company, makes its January-March performance public Thursday.