Peabody Energy Corp. (BTU) , the second-largest US-based coal miner and producer with a market cap of $4.77 billion, released its earnings statement for the third quarter on Thursday that showed the company losing money. Shares rallied all the same however, on adjusted profits as well as forward guidance that beat expectations.
For the recently-ended period, Peabody reported losses of $26.1 million, or $0.10 per share on revenue of $1.8 billion, versus the prior-year period during which the company netted $42.9 million or $0.16 per share on revenue that was 13 percent higher. On an adjusted basis however, the company ended up earning $0.05 per share, against analyst expectations of a $0.04 per share loss on revenue of $1.78 billion, a result that delighted investors, sending the stock much higher even before the opening bell.
Peabody’s business is primarily in metallurgical coal, as well as thermal coal for use in electricity generation. Generally speaking, steel demand has declined, sending prices tumbling and causing a reduction in demand for the company’s metallurgical coal products, while utilities in the US have been switching over to natural gas where prices have been more favorable. The coal miner’s shares have dipped some 32 percent on the year, though losses have been pared back to some extent during the present quarter.
Coal prices have also been hit by the increasingly widespread negative image it has with regard to public sentiment, and the effect on coal companies in general has been plain to see. Peabody’s competitors such as Walter Energy (WLT) have had a much tougher time of it. At the very least, the company can boast that shipments out of its Australian mines were up 6 percent during Q3 to 9 million tons, against an 8 percent drop in the cost per ton.
Furthermore, Peabody reduced its capital spending target down to $400 million from $450 million, as the company expects continued downward price pressure. Shortly before the closing bell, shares for the company were trading some 3.7 percent higher to $18.55 per.
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