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A review of Arch’s performance through 2013

Jing Shun Kee

Arch Coal’s 4Q and full year 2013 report (Part 1 of 4)

Earnings call

As one of the major coal suppliers in the U.S., Arch Coal, Inc.’s earnings call is a good source of information for investors in the coal industry. The company’s earnings call has laid out the current and expected demand for the coal industry and how the company has performed in the challenging coal market.

ACI EPS 3 years

Bleeding cash

With the weak coal market conditions and problems with rail service providers, it is unsurprising to hear that Arch Coal has reported its eighth straight quarter of losses. This is in line with most of its competitors who have similarly reported losses for their most recent quarter. Despite the losses, the company’s share price shot up 5% in the early hours of trading due to the management’s comments on stabilizing coal prices in the near future.

20% drop in revenue

Arch reported just over $3 billion in revenue this year, down just over 20% as compared to fiscal year 2012. The decline in revenue is mainly attributed to the weaker coal market pricing. However, Arch’s reduction in costs of over $500 million in the past year was not enough to mitigate the drop in revenue. They posted a loss of $371.2 million, or $1.75 per share which was more than their losses in the previous year of $295.5 million, or $1.39 per share. If adjusting for one off $265.4 million non-cash goodwill impairment charge, their losses were $95.1 million, or $0.45 cents per share, worse than analysts’ expectations of $0.39 per share.

For further information about Arch Coal, see A handy investor guide to Arch Coal (ACI).

Continue to Part 2

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