UPDATE 4-Arch Coal sees 2010 profit surge on bullish forecast

* Sees 60 pct hike in adj. profit this year

* Expects to triple sales of steel-making coal

* Shares down slightly after rising earlier

(Adds CEO comments, stock move)

By Steve James

NEW YORK, April 19 (BestGrowthStock) – Arch Coal Inc (ACI.N: )
forecast a 60-percent increase in 2010 operating profit and
said it expects to more than triple sales of steel-making coal,
sending its shares up on Monday before they dropped back.

“Overall, Arch posted a slight first-quarter miss,” said
analyst Jeremy Sussman of Brean Murray, Carret & Co, noting the
company had a $4 million loss on its trading operation.

“Without this, first-quarter results would have been
roughly in line with consensus estimates. Importantly … Arch
significantly raised its 2010 earnings guidance.”

The mining company said weak conditions in the U.S. power
plant market offset strong demand for steel-making
metallurgical coal in the first quarter, but it forecast
improvement in domestic steam coal markets this year.

“We now expect to more than triple our planned
metallurgical coal sales in 2010 versus last year, capitalizing
on the strength of global metallurgical coal markets,”
President and Chief Operating Officer John Eaves said.

Arch was expanding production to increase total
metallurgical coal capabilities to about 8 million tons and
increased its full-year 2010 adjusted earnings per share
estimate by 60 percent based on improved sales prospects,
especially for metallurgical coal.

Arch stock rose over 2 percent in morning trading on the
New York Stock Exchange, but in the afternoon it fell back 12
cents to $25.88 as the broader market slipped.

Arch was the first of the big U.S. coal companies to report
financial reports since the April 5 explosion that killed 29
miners at a Massey Energy (MEE.N: ) mine in West Virginia.
Peabody Energy (BTU.N: ) is due to report on Thursday.

“The met (metallurgical) market is very robust and it has
gotten more robust over the last few weeks,” Chairman and
Chief Executive Officer Steven Leer told Wall Street analysts.

“So we think it will be a very attractive opportunity for
all of our shareholders.”

Leer said he expected improved results through 2010,
particularly in the second half. “A slowly improving industrial
economy, more seasonal weather trends and continued coal supply
declines … will allow generator stockpile levels to return to
more normal levels in the back half of the year.

“These trends should provide the catalyst for improvement
in all of our domestic steam coal operations,” he said.

Leer also said Arch would benefit from an improved forward
price curve for Powder River Basin coal from Montana and
Wyoming, where he said prices have improved by 40 percent from
a year ago. “We are extraordinarily well positioned, so
obviously our guidance reflects this.”

The St Louis-based company reported a net loss of $1.8
million, or 1 cent per share, compared with a year-earlier
profit of $30.6 million, or 21 cents per share. Revenue rose
4.5 percent to $711.9 million.

Excluding a charge related to an acquisition, Arch said it
earned 3 cents per share. Analysts were expecting the company
to report a profit of 8 cents per share, excluding the charge,
according to Thomson Reuters I/B/E/S.

Arch said it expected to earn $1.00 to $1.40 per share for
full-year 2010, excluding a noncash charge. Analysts currently
expect 90 cents per share for the full year.

Arch said the revenue growth was due to higher sales volume
attributed to the addition of the Jacobs Ranch mines acquired
last October. But the increase in revenues was offset by higher
noncash costs, higher interest expense and the loss in the
company’s trading arm.

Indeed, Arch sold 37.5 million tons in the quarter, a big
increase from 30.6 million tons in the first quarter of 2009.
But the average price per ton dropped to $17.74 from $20.94.

(Reporting by Steve James; Editing by Lisa Von Ahn, Dave
Zimmerman, Phil Berlowitz)

UPDATE 4-Arch Coal sees 2010 profit surge on bullish forecast