Arch Coal Business Analysis Presented by: Melissa Hanke

Company Background Arch Mineral Corporation was established in merged with Ashland Coal to from Arch Coal (ACI) Merger created leading low-sulfur coal producer in eastern U.S.

Noteworthy Acquisitions 1998: acquired Black Thunder mine 2004: acquired Triton Coal Company for $364 million 2009: acquired Rio Tinto’s Jacob Ranch mine

Business Description Arch Coal Inc. contributes 15% of U.S. coal supply Among the top 5 leading coal producers in U.S. 46 active mines in top regions Powder River Basin Appalachia Western Bituminous Illinois

Industry Description Obtaining anthracite or lignite coal Underground or surface mining Coal industry in maturity stage Slowing demand for product Facing direct competition from other industries Price competition Stage before decline Dying industry

New York Times Article “More than 100 of the 500 or so coal-burning power plants in the United States are expected to be shut down in the next few years. While coal still provides about a third of the nation's power, just four years ago it was providing nearly half” (Lipton, 2012).

Product Mix & Market Steam coal (thermal coal) Generate electricity Metallurgical coal Production of steel ACI focuses on steam coal Power utilities, steel producers, industrial facilities Exports

Competitive Environment In comparison with their main competitors, ACI is not among the top three financially. Lowest market capitalization at $1.14 billion dollars compared to CONSOL Energy Corporation with a market cap of $7.66 Lowest revenue at $4.09 billion compared to Peabody Energy Corporation’s $8.08 billion.

SWOT Analysis

Financial Analysis Revenue has barely increased over the last three years Negative net profit Price per share has dramatically decreased Beta stock at 2.5  highly volatile Negative P/E ratio

Conclusion ACI is a great company that is a part of a dying industry Due to renewable energy Financials on the downward slope Decreased over past three years

Recommendations Arch Coal Inc. is not an attractive acquisition for a company like CCL that has a lot of cash since ACI’s finances are in disarray CCL should invest in a company that is part of the renewable energy industry