Peabody Energy Corp. (BTU:US), the largest U.S. coal producer, posted first-quarter earnings that beat analysts’ estimates after an increase in output and revenue per ton in Australia.
Net income fell 2.2 percent to $172.7 million, or 63 cents a share, from $176.5 million, or 65 cents, a year earlier, St. Louis-based Peabody said today in a statement. Earnings excluding a tax-related expense were 11 cents higher than the average (BTU:US) of 23 estimates compiled by Bloomberg.
Sales rose to $2.04 billion from $1.74 billion, missing the $2.09 billion average of 16 analysts’ estimates.
Peabody is integrating assets from Australia’s Macarthur Coal Ltd., which it acquired in December for metallurgical coal mines and access to Asian customers. Peabody said last month that storms and flooding in Queensland had limited access to the company’s mines there and reduced output, warning that earnings would be at the “low end” of the company’s targeted range of 50 cents to 75 cents a share.
“I think people had trimmed their numbers a little too much to reflect the production disruptions over there,” said Kuni Chen, an analyst at CRT Capital Group LLC in Stamford, Connecticut.
Peabody lowered its 2012 forecast for coal sales to a range of 235 million to 255 million tons, from a range of 245 million to 265 million tons, cutting its U.S. sales-volume forecast by 10 million tons. The company said U.S. coal-fueled electricity demand may decrease by more than 100 million tons this year.
Lower U.S. Output
The company has reduced production from U.S. mines after demand declined because of record high temperatures in the U.S. and natural-gas prices fell to the lowest in a decade.
More than 15,000 records were broken in the continental U.S. in March, as temperatures averaged 51.1 degrees Fahrenheit (10.6 Celsius), 8.6 degrees above the 20th-century average, according to the National Oceanic and Atmospheric Administration. Gas futures fell below $3 per million British thermal units during the quarter, causing power utilities to shift to the cheaper fuel.
Greg Boyce, Peabody’s chief executive officer, said that the company has had discussions with some customers who “have fairly health stockpiles,” about rescheduling coal shipments from this year into 2013 or 2014.
“We’ve had some commercial discussions around rescheduling those shipments,” Boyce said on a conference call with analysts today. “There is the potential that we’ll see some continued decrease in coal demand for the rest of the year, which will require potentially some additional reductions across the industry.”
Peabody rose 7 percent to $30.46 at the close in New York. The shares have fallen 8 percent this year.
Thermal coal is used in electricity generation while metallurgical coal is combined with iron ore and other materials to produce steel. The average price of metallurgical coal was $168.63 a ton in the first quarter, 19 percent lower than a year earlier, according to data compiled by Bloomberg.
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