Analysts Expect a Marginal Rise in Arch Coal’s Revenue in 3Q17


Oct. 30 2017, Updated 4:40 p.m. ET

Arch Coal’s estimated revenue

In 3Q16, Arch Coal (ARCH) reported consolidated revenue of ~$550.3 million. Analysts expect Arch Coal to post revenue of $550.7 million in 3Q17, a marginal increase of 0.06% year-over-year.

The expected rise is primarily due to an anticipated increase in metallurgical coal shipments. Arch Coal expects its metallurgical segment to benefit from its cost structure over time.

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Coal production

Arch Coal is a supplier to major utilities and industrial users in the United States. According to the latest quarterly coal report published by the EIA (U.S. Energy Information Administration), coal production in all major US coal-producing (KOL) regions fell 5.1% between 1Q17 and 2Q17. However, in 2Q17, production was 16.6% higher than in 2Q16.

Weak demand due to mild weather and lower natural gas prices hasve resulted in lower coal production, which may suggest a fall in production for Arch Coal and peers Alpha Natural Resources (ANRZQ), Natural Resource Partners (NRP), and Alliance Resource Partners (ARLP). However, sustained demand for metallurgical coal may offset the effect of lower thermal coal production. According to Arch Coal’s lates filings, it expects to sell 6.9 to 7.1 million tons of metallurgical coal in 2017.

Arch Coal’s revenue is derived from its operations in the Illinois Basin, Powder River Basin, and Appalachian region. Since the beginning of 2017, according to the EIA, coal production has risen approximately 4.0% in the interior region, 8.0% in the Appalachian region, and 17.0% in the western region. Continue to the next part for a look at Arch Coal’s margin estimates.


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