Arch Coal profit rises; shares soar

Shares of Arch Coal Inc. reached their highest point in a year Friday after the nation’s No. 2 coal producer reported fourth-quarter profit that exceeded Wall Street expectations and forecast record earnings in 2008.

Net income increased to $81.3 million, or 56 cents a share, from $79.5 million, 55 cents, in the same period a year ago, Creve Coeur-based Arch said in a statement. Sales rose 4 percent to $644.4 million.

“Our operations ran exceptionally well during the fourth quarter,” said John W. Eaves, Arch’s president.

Arch shares were up $3.05, or 6.9 percent, to $47 at 11 a.m. local time on the New York Stock exchange. Earlier in the morning they reached $47.90 — a 52-week high.

Coal sales volumes fell slightly, but Arch was paid an average price of $17.48 per ton, the highest level in almost two years. Arch was helped by the startup of its Mountain Laurel mining complex in West Virginia, which came online as prices for central Appalachian coal were rising .

While Arch only operates domestically, the company is benefiting from increasing coal exports in response to growing international demand, particularly in India and China. The company estimates U.S. coal exports rose by almost 10 million tons in 2007 and the company expects another 20 million-ton increase this year.

“We foresee a dynamic coal market in 2008, with robust international coal demand providing the catalyst for further strengthening in domestic coal markets,” Arch Chief Executive Steven F. Leer said.