Arch Coal, Inc. reported Tuesday a net loss of $113 million in the first quarter of 2015 compared with a net loss of $124 million in the first quarter of 2014. Revenues totaled $677 million for the three months ended March 31, 2015 and adjusted EBITDA was $82 million, a threefold increase as compared to the prior-year quarter.
"Despite lower shipment levels in the first quarter of 2015 when compared to the previous quarter, we increased cash margins by more than 20 percent in our Appalachian and Powder River Basin segments," the company said in a statement. "Driven by a strong operating performance, our Appalachian region reported its lowest cost performance in four years, allowing us to lower our annual cost guidance for the region."
The global coal trade remains under significant pressure, the statement continued, as prevailing seaborne thermal and metallurgical prices have further softened and supply continues to outpace demand growth in the international thermal and metallurgical markets. The statement noted that global steel production has declined 1 percent since the start of the year, marked by weakness in Europe and Asia, and steel capacity factors in the United States fell below 69 percent in April from 77 percent at the end of 2014.
Given recent market trends, Arch believes industry-wide coal exports from the United States will decline below 90 million tons in 2015 compared with 2014 export levels of nearly 100 million tons, with metallurgical exports accounting for most of the reduction. The company expects seaborne coal markets to rebalance in time as demand grows, new global supply slows, and previously announced supply rationalizations take effect.
Arch now expects US coal consumption for power generation to decline by 80 million tons in 2015 as compared to 2014, due to the surplus of natural gas and the impact of new environmental regulations that took effect in April. As a result of these factors, utility stockpiles increased by an estimated 10 million tons during the first quarter and are expected to build further over the course of the year.