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Peabody posts 2d-qtr. loss but bullish on coal demand

Keywords: Tags  Peabody Energy, earnings report, coal, metallurgical coal, thermal coal, raw materials, supply chain, coal markets mining

NEW YORK — Peabody Energy Corp. fell into the red in the second quarter despite coal’s contribution to the global energy mix rising to 30 percent of consumption, its highest level since 1970.

The St. Louis-based company posted a net loss of $73.3 million for the three months ended June 30 in contrast to net income of $90.3 million in the same period last year despite a 1.9-percent increase in revenue to nearly $1.76 billion.

The loss was driven primarily by a $188.7-million tax provision differential as a result of a lower Australian tax benefit and higher U.S. earnings compared with last year, the company said July 22 in commentary released with its earnings results.

However, the coal mining company forecast rising coal demand globally and an imminent floor for steadily declining coal prices. "U.S. coal demand has been expanding for the last two years," chairman and chief executive officer Gregory H. Boyce said in a statement. "Peabody expects that accelerating supply cutbacks and rising demand will lead to improving seaborne market fundamentals heading into 2015."

Metallurgical coal price benchmarks in the second quarter settled in line with first-quarter prices, according to Peabody. However, seaborne metallurgical coal production cutbacks will total nearly 20 million tonnes, with current low prices expected to pressure suppliers, the company said. Nonetheless, China and India coal imports are expected to grow through 2016, with urbanization and industrialization driving a 10- to 15-percent increase in seaborne metallurgical coal demand.

Peabody is targeting adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $140 million to $190 million for the third quarter compared with adjusted Ebitda of $213.1 million in the second quarter, with a predicted per-share loss of 40 to 53 cents.

The company lowered its 2014 capital spending target to $210 million to $250 million, mainly to sustain projects.

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