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Peabody suffers Q2 2014 loss on low Australian prices

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World Coal,

Peabody Energy suffered a Q2 loss of US$70.2 million as earnings from its Australian operations dropped 5%. Australian revenue totaled US$707 million, down from US$742 million for Q2 2013, despite an increase in tonnage sold from 8.6 million t to 9.7 million t. Operations were particularly hit by a drop in revenues per short ton of 15% from US$86.44 to US$73.16 – a price the company expects to continue into the next quarter.

In the US, mining revenues rose to US$1.03 billion from US$970.9 million in the same period last year. Performance in its Western mining operations were particularly strong, despite problems with available rail transport, with production up to 40.1 million short t from 37.6 million short t in Q2 2013. Revenue per short ton was also up 6%.

“US market fundamentals remain strong with 2014 coal demand expected to rise 30 million to 40 million short t, reflecting a continuation of utility switching from gas to coal over the last two years” said Gregory Boyce, Peabody chairman and CEO in an earnings call.

However, “rail performance has been disappointing and continues to impact the Powder River Basin (PRB),” Boyce continued. “We estimate that 15 million short t of PRB shipments have been missed in the first half of the year due to the low power rail performance and utility coal conservation measures due to inadequate deliveries. In the second quarter we estimate that Peabody’s Western volumes were impacted by 1 million to 2 million short t related to this rail performance. And as a result we’ve lowered the top end of our 2014 US sales guidance by 5 million short t.”

The company is now targeting total annual sales of 245 – 260 million short t,comprising US sales of 185 to 190 million short t and Australian sales of 35 to 37 million short t.

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