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Arch Coal reports net loss in fourth quarter

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Arch Coal on Feb. 5 reported a loss of nearly $300 million in the fourth quarter and a net loss of $684 million for the full year. Adjusted figures were a loss of $88.7 million for the quarter and a loss of $76.7 million for the year,

Both were sharp turnarounds from 2011, when the company reported gains for the quarter and the year.

Arch CEO and President John Eaves said the company is seeing signs of a coal rebound the latter half of 2013.

"At Arch, we are running our operations in a manner that will enable us to capitalize on the rebound as it occurs," Eaves said in the company's quarterly earnings release. "We are proactively responding to increased interest for Western Bituminous coal after several years of weakness. We are also making progress in realigning our asset portfolio in Appalachia — and expect our competitive position to be further enhanced as the Leer longwall starts up in the third quarter of 2013."

Eaves said the company is successfully executing its business strategy as it faces challenging coal market conditions. He points out changes in the industry, including increased exports. Arch recorded record levels of company exports in the fourth quarter.

"Arch achieved several notable milestones while managing through a tough 2012," Eaves said. "First, we delivered another strong performance in our core values of employee safety and environmental stewardship.  Second, the company's exports rose to a record 13.6 million tons in 2012, demonstrating its growing presence in the seaborne coal trade.  Third, we further improved our operational efficiency through the consolidation of operations, strong cost control at active operations and significant reductions in capital spending.  Lastly, we further bolstered our liquidity to $1.4 billion, positioning Arch to weather near-term market headwinds and emerge from this cycle as an even stronger producer."

In its financial report, Arch predicted power producers would increase coal use as gas prices begin to rise. Colder winter temperatures in Asia and increased use of coal in Europe are also projected to increase coal exports.

"We are beginning to see signs of a recovery in coal markets after a very challenging 2012," said Eaves. "Assuming normal weather trends prevail — and economic activity continues to accelerate — we see global coal supply and demand balancing over the course of 2013, setting the stage for improved market fundamentals."