NEW YORK (AP) -- Standard & Poor's Ratings Services lowered its debt rating on Arch Coal Inc. to "B+" from "BB-," saying a downturn in coal demand could hurt the company's profits.
Standard & Poor's also cut its rating on Arch Coal's senior unsecured notes to 'B-' from "B+." The downgrades push Arch further into junk bond territory.
The ratings agency said that it expects Arch's earnings before taxes, interest and other factors to be much lower than previously anticipated in 2012 and 2013 because of weak demand for coal in the U.S.
Mining companies like Arch Coal are struggling to stay profitable as more utilities switch from coal to cheap natural gas to fire generators. Some coal companies, including Arch, have cut jobs and pared production.
On Tuesday Arch said its first-quarter profit dropped to $1.2 million from $55.6 million a year ago.
Shares of Arch Coal fell 28 cents Thursday, or 3.3 percent, to close at $8.22. The stock has traded between $8.42 and $31.99 in the last 52 weeks.