UPDATE 1-Arch Coal adjusted loss widens on soft coal market
July 30 (Reuters) - Arch Coal Inc reported a wider adjusted loss on Tuesday on a drop in metallurgical coal prices, though the miner said the outlook for the U.S. thermal coal market was improving.
In light of the weak coal market, the St. Louis, Missouri-based company has focused on reducing its costs, and reported a 17 percent decline in cash costs in the second quarter.
Arch also reduced its cash cost guidance for all operating regions, and said it plans to cut capital spending for the year by about $20 million.
"Our cost-reduction initiatives are generating results, and we will continue to pursue aggressive cost reductions across all of our operations during the second half of the year," Chief Executive John Eaves said in a statement.
While the company was cautious on the near-term outlook for metallurgical coal, used in steelmaking, it said domestic demand for thermal coal, used in power plants to generate electricity, had increased while supply had decreased, helping to reduce stockpiles.
Arch said it continues to expect an eventual rebalancing in the metallurgical coal market, with steel demand anticipated to increase through the end of decade.
The miner, which is looking to divest non-core assets and build up its metallurgical coal business, reached a deal in June to sell its thermal coal mines in Utah to privately held Bowie Resources for $435 million.
Arch reported an adjusted loss of $60.5 million, or 29 cents a share, for the second quarter, compared with a loss of $22.1 million, or 10 cents a share, a year earlier.
Including one-items such as impairment charges, Arch's net loss was 34 cents a share, compared with a net loss of $2.05 a year earlier, when the company idled five coal mines and recorded a $526 million charge.
Revenue from continuing operations fell 21 percent to $766.3 million on the weaker market for metallurgical coal.
Average cash costs in the quarter were $18.57 a ton, down from $22.42 in the year-ago period; its average sales price fell 21 percent to $22.34 a ton.