ST. LOUIS (AP) — Arch Coal Inc. said Tuesday that "severe weakness" in the U.S. market for coal used to generate electricity cut sharply into its first-quarter earnings and forced it to further curtail production for the year.
Falling well short of Wall Street's expectations, the St. Louis-based company's said its net income during the January-March quarter totaled $1.2 million, or a penny a share, compared with $55.6 million, or 34 cents a share, a year ago.
Revenue was $1.04 billion, up 19 percent from $872.9 million in the 2011 quarter.
After excluding certain one-time items, Arch reported an adjusted loss of $0.04 per diluted share in the recent quarter.
Analysts surveyed by FactSet expected 16 cents per share on revenue of $1.12 billion.
Arch Coal blamed the lower earnings on a U.S. market that appears unsettled, at least for now. The mild winter reduced demand for electricity and heating, which helped push down natural gas prices. A number of power plants have switched to gas from coal to generate power, resulting in what Arch called "unprecedented" stockpiles that reduced demand.
Arch thinks that U.S. coal consumption for electrical generation could drop by at least 75 million tons this year, so it is paring its production by 25 million tons over 2012. President and CEO John Eaves called that part of a "comprehensive strategy to address the current market environment."
Arch, which has eliminated some 500 jobs since the market's downturn, said its production pullbacks during the current quarter will include idling three draglines and related operations in its western U.S. operations. Arch also has delayed the startup of an Appalachia longwall operation and closed five thermal coal operations in that region.
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