Dec 14 Coal miner Peabody Energy Corp
halved its capital spending for 2013 as it warned earnings would
hit a trough in the first quarter due to weak prices and sales.
Peabody shares were up about 2 percent at $28.20 on the New
York Stock Exchange on Friday. A weak coal market has pushed the
stock down about 18 percent this year.
The company said it expects capital expenditures to be 50
percent lower than the $1.0 billion to $1.1 billion earmarked
"People expected a bad first quarter. but the fact that
capital expenditures have comes down so dramatically means they
will have free cash flow," said Iberia Capital Partners analyst
Damp demand from China and escalating operating costs and
new taxes in Australia have hit Peabody, which has been
struggling in the United States as power companies replace
thermal coal with cheaper natural gas.
U.S. sales would decline by about 2 million tons in the
first quarter, Peabody said. It forecast sales volumes of 180 to
190 million tons for the full year, compared with 188 to 192
million tons it targeted for 2012.
The company expects U.S. prices to fall 5 percent in the
first quarter as higher-priced contracts expire.
The fall in prices was greater than anticipated, said
analysts at Simmons and Co.
Peabody said it expects Australian sales volumes to rise to
between 33 million and 36 million tons in 2013 from 31 million
to 33 million tons this year.
Most of Peabody's growth outside the United States has come
from Australia, where it took over Macarthur Coal a year ago. It
has, however, put Australian expansion plans on hold and expects
costs to rise about 5 percent in 2013.
The company, however, expects quarter-over-quarter
improvement for the rest of 2013, driven by increased U.S.
gas-to-coal switching as natural gas prices rise, and a pickup
in global seaborne coal markets.