Arch Coal and Cloud Peak report second-quarter losses

2014-07-30T08:30:00Z Arch Coal and Cloud Peak report second-quarter lossesBy BENJAMIN STORROW Casper Star-Tribune The Billings Gazette

CASPER, Wyo. — Coal’s blues continue.

Arch Coal and Cloud Peak Energy, two of the largest producers in the Powder River Basin, each reported second-quarter losses on Tuesday.

Arch said it lost $97 million through the first six months of the year, compared to $72.2 million over the same period last year. Cloud Peak recorded a loss of $17.8 million in the year’s first half. The Gillette-based firm posted a profit of $20.1 million in the first six months of last year.

Both companies said rail congestion in the Powder River Basin curtailed shipments. And each reported customer stockpiles of coal from the basin had fallen below normal levels.

“We were disappointed that rail service interruptions continued to impact our shipments in the second quarter,” said Colin Marshall, Cloud Peak CEO, in a statement.

Arch’s shipments from its Wyoming mines increased in the second quarter. The St. Louis company reported shipments rose from 25.7 tons in the first three months of 2014 to 26.9 tons in the second quarter.

But those figures were below what the company sold in the second quarter last year, when Arch reported sales of 27.1 tons.

Prices on Powder River Basin coal rose slightly. Arch said average sales stood at $12.79 in the second quarter, up from $12.73 in the first quarter and $12.56 in the second quarter of last year.

Better prices combined with cost control measures resulted in wider margins at Arch’s Wyoming mines. The company said its cash margin was up to $1.70 per margin in the second quarter from $1.28 in the first three months of the year.

“Our mines turned in solid performances in the second quarter, supported by cost reductions that improved margins across our operating platform versus the first quarter,” said Arch COO Paul Lang.

Margins at Arch’s Powder River Basin mines in the second quarter of 2013 were $2.09.

Arch continues to battle weak global prices for its metallurgical coal, which is produced at its eastern mines. Last week, the company announced it was idling two metallurgical coal mines in Appalachia due to weak global prices for coal used to make steel.

Cloud Peak’s 2014 sales of 41.7 million tons were down slightly compared with the first half of 2013, when the company recorded shipments of 42.2 tons.

Revenue fell accordingly and was down to $639 million through June, compared to $668 million last year.

“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,” said Marshall, the Cloud Peak CEO.

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