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UPDATE 1-Peabody loss smaller than expected as Australia volumes improve
July 22, 2014 / 3:40 PM / 3 years ago

UPDATE 1-Peabody loss smaller than expected as Australia volumes improve

* Second-qtr loss $0.28/share vs est. $0.29

* Australia performance better than expected - analyst

* Shares rise as much as 3.7 pct (Adds forecast, background, analyst comment, shares)

July 22 (Reuters) - Coal miner Peabody Energy Corp reported a smaller-than-expected quarterly loss, helped by stronger price realizations in the United States and higher sales volumes in Australia.

Peabody’s shares rose as much as 3.7 percent on Tuesday, as investors welcomed the suggested improvement in demand for metallurgical, or steel-making, coal.

Shares of other coal miners also rose modestly, with Alpha Natural Resources Inc rising 3 percent and Arch Coal Inc , Consol Energy Inc and Cloud Peak Energy Inc gaining up to 1 percent.

U.S. coal miners have been grappling with a host of problems such as poor rail transportation to western states, lower sales and weak met coal prices, which have forced them to idle mines.

Arch Coal said on Monday that it would idle its Cumberland River coal company complex in Kentucky and Virginia, while Cliffs Natural Resources said last month that it planned to idle its Pinnacle mine in West Virginia unless market conditions improve.

“Peabody is shipping more metallurgical coal than most people had expected,” said Clarkson Capital Markets analyst Jeremy Sussman, referring to the company’s higher second-quarter sales volumes in Australia.

Peabody sold 4.8 million tons of met coal in Australia in the quarter, higher than the 4.3 million tons Sussman had expected.

Peabody also reaffirmed its 2014 sales target of 35 million to 37 million tons from its Australian operations, helped by an improvement in performance at its Goonyella mine in the north-eastern part of the country.

Peabody said in May that it would sell its Wilkie Creek Mine in Australia for $70 million.

Revenue from the company’s Australian operations fell 5 percent to $744.8 million in the second quarter ended June 30. Australia accounts for 40 percent of Peabody’s total revenue.

Peabody forecast a third-quarter adjusted loss of 40-53 cents per share, much bigger than the 20 cents per share loss analysts were expecting, according to Thomson Reuters I/B/E/S.

“Overall, while we anticipate investors will appreciate Peabody’s ability to hold the line in Australia in a softer price environment, we expect investors to be cautious on the company’s notably softer Q3 guidance,” Brean Capital analyst Lucas Pipes wrote in a note.

Excluding one-time items, Peabody’s second-quarter loss was 28 cents per share, slightly lower than the average analyst estimate of 29 cents per share.

Peabody’s shares were up 1.2 percent at $15.50 in late morning trading on the New York Stock Exchange.

The stock had fallen about 21.5 percent this year to Monday’s close, while the S&P 500 Coal & Consumable Fuels Sub Index fell 3.5 percent in the period. (Reporting by Sneha Banerjee and Sayantani Ghosh in Bangalore; Editing by Kirti Pandey)

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