Business and Finance

Arch Coal Inc., the nation’s No. 2 coal producer, reported a $15.1 million second-quarter loss as sales declined amid sagging demand for fuel to run power plants and make steel.

But its shares soared 7.5 percent Friday as the company announced more cuts to planned output and capital spending.

The stock rose $1.27 to close at $18.14 in New York Stock Exchange composite trading, and is up 11 percent this year.

"They’ve taken production off the market, and they’ve cut capital spending, which is good," said Michael Dudas, a coal analyst at Jefferies & Co. "Arch will benefit from an eventual recovery."

Arch’s net loss of 11 cents a share was wider than analysts expected. It included $3 million of expenses for the planned purchase of the Jacobs Ranch mine in Wyoming’s Powder River Basin.

The quarter represented a dramatic reversal from the same period last year when coal prices were peaking and the company earned $113 million, or 78 cents a share pay day loans.

Arch said second-quarter sales fell 29 percent to $554.6 million as previously announced cuts in output led to a 20 percent drop in coal shipments. Realized coal prices fell 7.6 percent to $19.43 a ton with the biggest decline in Appalachian coal used by steelmakers.

The company expects to sell 114 million to 118 million tons of coal from its own mines this year compared with 137.8 million tons in 2008. Capital spending will be $290 million to $320 million, or far less than last year’s $497.3 million.

Other coal producers, too, have lowered output targets and cut spending in response to the recession.

Arch CEO Steven F. Leer told analysts during a conference call that the coal markets have "reached a bottom" and there are signs of increasing demand later this year.

Bloomberg News contributed to this report.

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