Coal miner Peabody posts 1Q loss, outlook upbeat

Peabody Energy posts 1Q loss on soft demand, results beat analysts' expectations

ST. LOUIS (AP) -- Coal miner Peabody Energy Corp. said Thursday that it posted a loss for the first three months of the year on lower U.S. shipments and prices for its Australian coal, though the results still beat Wall Street's expectations.

St. Louis-based Peabody, the world's biggest private-sector coal producer, cautioned that the current quarter could be similarly impaired, as it forecast earnings in a range of a loss of 25 cents per share to a penny per share profit. The company did not offer guidance for the full year.

Like other coal companies, Peabody has struggled amid stubbornly soft demand that has driven down coal prices as utilities turned to cheaper natural gas to generate electricity. But Peabody has insisted there have been encouraging signs of recovery, including expectations of rising U.S. coal demand and Asian imports as natural gas prices tick up.

While touting the company's global cost-containment effort in recent months, Peabody chairman and CEO Gregory Boyce said Thursday that "first-quarter U.S. coal demand saw strong improvement over the prior year as generators switch back to coal and away from higher-priced natural gas in key regions."

"We now expect that during 2013, coal will recapture the vast majority of its 2012 demand that was lost to natural gas," Boyce said in a statement. In the meantime, he added, "we continue to aggressively reduce costs, exercise capital discipline, maximize cash flows and reduce debt."

The world's biggest private-sector coal company said its net loss attributable to common shareholders was $23.4 million, or a loss of 9 cents per share, down sharply from a profit of $172.7 million, or 63 cents per share, a year earlier. Excluding special charges the loss was 5 cents per share.

Revenue fell 14 percent to $1.75 billion.

On average, analysts polled by FactSet expected an adjusted loss of 13 cents per share on revenue of $1.78 billion.

Peabody shares rose $1.44, or 7.6 percent, to close at $20.46 Thursday.

Peabody expects sales for all of this year to total 230 million to 250 million tons, including 180 million to 190 million tons in the U.S. and 33 million to 36 million tons in Australia. The company forecast its per-ton U.S. revenues to be 5 to 10 percent below last year's levels.

Cowen Securities analyst Daniel Scott, in a research note to clients Thursday, called Peabody's first-quarter showing "a net positive," pointing to the company's push to manage costs, paying down $100 million in debt in the first quarter and the expectation it will pay off a similar amount by May.

"While acknowledging the difficult pricing environment, the company had relatively optimistic market commentary," Scott wrote. Peabody's results detailed Thursday "were primarily driven from the cost side of the equation, but we view the lack of further negative news positively, given the significantly depressed global coal environment of late."