Peabody Energy profit tumbles

Tue. October 20, 2009; Posted: 02:41 PM

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Oct 20, 2009 (St. Louis Post-Dispatch - McClatchy-Tribune Information Services via COMTEX) -- ERGY | Quote | Chart | News | PowerRating -- Declining U.S. coal output and higher operating costs led to a steep decline in Peabody Energy Corp.'s third-quarter profit.

Net income fell 71 percent to $106.8 million, or 40 cents a share, compared with $369.5 million, or $1.35 a share, in the same period a year ago, St. Louis-based Peabody said in a statement. Sales fell 12 percent to $1.67 billion.

Peabody, the world's largest private sector coal producer, said sales volumes fell 3 percent to 65.6 million tons because of previously announced output cuts in the west.

While Asian energy demand is accelerating, the U.S. market is stuck in neutral. Electricity generation is down 10 percent this year because of the recession and mild summer weather. Lower natural gas prices and a decline in coal exports to Europe have also taken a bite out of demand.

Peabody, which has already reduced coal shipments from Wyoming's Powder River Basin, is targeting another 5 percent cut in 2010.

Meanwhile, the company continues to grow its presence in Australia by opening new mines and expanding existing ones to help meet a growing appetite for coal in China and India.

During the summer, Peabody opened a new Asian coal-trading hub in Singapore, an office in Indonesia and the company continues to pursue projects in China and Mongolia.

Excluding the impact of a $22.3 million increase in taxes related to a 8.5 percent gain in the Australian dollar compared with the U.S. dollar.

Peabody earned 49 cents a share on that basis, far exceeding the 22-cent average estimate of analysts polled by Thomson Reuters.

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