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Arch Coal, Inc. (ACI) Reports 200% Increase in Second Quarter Net Income, Raises Guidance

Arch Coal, Inc. (ACI), a leading U.S. producer of steam and metallurgical coal, with interests in Appalachia, the Powder River Basin and the Western Bituminous region, reported better than expected second quarter results this morning. Net income surged 200% year-over-year to $113.0 million, or 78 cents per share, on revenues of $785.1 million, a 31% increase over the same period. Analysts who cover the firm expected earnings of 64 cents per share on $737.1 million in revenues.

“Arch delivered another strong earnings performance in the second quarter, achieving a three-fold increase in net income and earnings per share,” said Steven F. Leer, Arch’s chairman and chief executive officer. “We also beat the company’s previously established EBITDA record that was set in the first quarter of 2008. Our solid financial results were driven by expanded operating margins in our Central Appalachian and Western Bituminous regions, coupled with a significant contribution from our trading and asset optimization function. Our diverse asset base helped the company overcome the impact of weather-related challenges at our Powder River Basin operations during the quarter just ended.”

The company raised guidance for FY 2008. Earnings are now forecast to be in a range of $2.50 to $2.85 per share, bracketing analysts’ consensus of $2.67 per share. “We are on track to deliver our best earnings performance in company history during 2008,” said Leer. “Our raised guidance range signals our confidence in coal market fundamentals and in the company’s future growth prospects. We are in a position today to capitalize on positive secular global trends given our low-cost operational profile and significant unpriced sales position.”

Shares of ACI closed at $50.94 yesterday and have traded in a range of $27.76 to $77.40 during the past year. Shares have fallen 30% the past month in conjunction with other stocks in the coal sector. ACI is currently trading 3% higher on volume of 87,000 shares in the pre-market.

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