Peabody Energy explodes after surprise profit

Tue 1:24 pm by Anwar Ali

Peabody predicts adjusted EBITDA between $210 million to $270 million and adjusted earnings per share to range from a 16-cent loss to a nine-cent profit.

Peabody Energy (NYSE:BTU) is the top performer amongst U.S. energy stocks today after surprising the street with a profit, as it takes advantage of growing coal demand from China and India.

Shares of the St. Louis, Missouri-based coal miner peaked nine per cent in early trading.

Looking ahead to the third quarter, Peabody predicts adjusted EBITDA between $210 million to $270 million and adjusted earnings per share to range from a 16-cent loss to a nine-cent profit, versus the mean analyst prediction of a 15 cent loss.

Sales for the entire fiscal 2013 will be somewhere between 230 to 250 million tons, including U.S. sales of 180 to 190 million tons and Australian sales of 33 to 36 million tons.

Peabody, which has operations primarily in the U.S. and Australia, said second quarter net income dropped 56 per cent to $90.3 million or 33 cents per share from $204.7 million or 75 cents per share for the same period a year ago.

Revenue dipped 13 per cent to $1.7 billion from $2.0 billion in 2012's second quarter. Analysts had predicted a five cent per share loss on $1.82 billion in revenue.

The volume of coal sold in the second quarter climbed 6.3 per cent to 60.8 tons from 57.2 tons.

Peabody plans to spend $100 million less than originally intended this year, resulting in a $350 million capital budget. The company is scaling back Australian cost targets to the mid-$70 per ton range this year while 2013 U.S. costs per ton are expected to be 2 to 3 percent lower than last year.

Peabody said production will fall in the second half of the year in order to curtail elevated export supplies from countries like Indonesia and Australia. China and the U.S., the world's largest coal producers, lowered production four and five per cent, respectively through June.

China's coal imports rose 13 per cent through June and are expected to reach record levels of 310 to 330 million tonnes.

India, meanwhile, imported 42 per cent more coal to compensate for high demand from new power plants unmet by domestic production.

Peabody says it expects global seaborne thermal demand to rise approximately 50 million tonnes in 2013 as 75 gigawatts of new coal generation come on line.

The company projects U.S. consumption will grow 50 to 70 million tons this year as coal grabs electricity generation market share from natural gas.

Despite today's performance, the company has shed more than a third of its value so far this year.