Arch Coal gets burned in fourth-quarter

Arch Coal Inc., the second-largest U.S. coal producer, said fourth-quarter profit fell 58 percent because of a mine closing in Colorado and costs for a legal settlement in West Virginia.

Net income fell to $9.15 million, or a loss of 2 cents a share after payment of preferred dividends, from $21.8 million, or 32 cents, a year earlier, St. Louis-based Arch said in a statement Friday. Sales rose 12 percent to $619.8 million as higher prices offset declines in mine output.

Profit was reduced by $33.3 million because of the temporary closing of the company's West Elk Mine in Colorado in October following the detection of gases indicating the presence of fire. There also were costs of $16 million for a legal settlement in West Virginia, the company said.

Excluding all one-time items, Arch, which has subsidiary operations in Utah, said it earned 25 cents a share. James Rollyson, an analyst at Raymond James in Houston, said that fell short of his estimate of 29 cents.

"They missed the estimate by a few cents and had a lot of confusing gains and charges to clean up their books," said Rollyson, who rates Arch shares at "outperform" and owns none.

Production from Arch's Coal Creek mine in Wyoming's Powder River Basin, which was idled in 2000, will resume in the third quarter at a cost of about $50 million, the company said. Output from the mine will reach about 15 million tons in 2007.

The reopening of Coal Creek "improves their outlook for 2007," Rollyson said.

The gases that shut the West Elk mine have been contained and full production may begin as early as March 1, Arch said.

Arch said it produced 33.5 million tons of coal in the fourth quarter, down 2.3 percent from 34.4 million tons a year earlier. The price of its coal rose 18 percent to an average of $17.67 a ton.

For 2006, Arch estimates its mines will produce 140 million to 150 million tons of coal, Chief Executive Officer Steven Leer said on a conference call with analysts and investors. That would be an increase of as much as 42 percent from 105.8 million tons in 2005.

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