Bloomberg News

Peabody Forecast Misses Estimates After Coal Price Drop

July 24, 2012

(Corrects to show second-quarter earnings missed estimates in sixth paragraph.)

Peabody Energy Corp. (BTU:US), the largest U.S. coal producer, forecast third-quarter earnings that trailed analysts’ estimates after metallurgical-coal prices fell and Australia introduced a carbon tax.

Profit excluding one-time items will be 20 cents to 45 cents a share in the third quarter, St. Louis-based Peabody said today in a statement. The average of 23 estimates compiled by Bloomberg was for 65 cents. Full-year sales will be 230 million to 250 million tons, compared with a previous forecast of 235 million tons to 255 million tons.

The price of metallurgical coal shipped from Australia, where Peabody bought mines with its acquisition of Macarthur Coal Ltd in December, averaged $210 a ton in the quarter, compared with $330 a year earlier, according to data compiled by Bloomberg.

“Targets reflect Australian conditions that include performance at contractor-operated mines, lower average realized pricing, a longwall move, timing of export shipments and the introduction of the carbon tax,” Peabody said in the statement.

Peabody shares fell 3.3 percent to $22.40 at 8:17 a.m. New York time before the start of regular trading.

Net income fell 28 percent to $204.7 million, or 75 cents a share, from $284.8 million, or $1.05 a share, a year earlier. Earnings excluding a tax benefit and other one-time items were 51 cents, missing the 53-cent average (BTU:US) of 24 estimates compiled by Bloomberg. Sales were little changed at $2 billion from $1.98 billion.

U.S. Output

The proportion of electricity generated from gas increased to 32 percent in April to equal coal’s share, the EIA said July 6. Cheaper natural gas and greater environmental regulations has led U.S. coal miners to cut millions of tons of output this year.

Domestic coal demand is at a 24-year low as the fuel accounts for the same share of U.S. electricity generation as gas for the first time in at least four decades, according to the U.S. Energy Information Administration.

Output from Peabody’s mines in the Powder River Basin fell 8 percent to 31.3 million tons in the second quarter from 33.9 million a year earlier, the U.S. Mine Safety and Health Administration reported on July 20. The average price of coal produced in the Powder River Basin of Wyoming and Utah fell 37 percent to $7.87 a ton from $12.40 a year earlier, according to data compiled by Bloomberg.

Thermal coal is used in electricity generation while metallurgical coal is combined with iron ore and other materials to produce steel.

(Peabody plans to hold a conference call with analysts and investors to discuss results at 11 a.m. in New York. To listen, go to the company’s Web site at http://www.peabodyenergy.com.)

To contact the reporter on this story: Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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Companies Mentioned

  • BTU
    (Peabody Energy Corp)
    • $15.88 USD
    • 0.22
    • 1.39%
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