Peabody Energy Corp. reported a much wider than expected
first-quarter loss as mounting challenges pressure companies across
the coal-mining industry.
"While our team has made considerable strides in driving down
costs, we know we have further work to do," said Chief
Executive-elect Glenn Kellow. He added cost improvements helped
offset lower coal prices and the impact of hedging.
Peabody, the biggest coal producer in the U.S. by output, has
been trying to turn itself around as it faces challenges from low
natural-gas prices, a glut of global coal supplies, weakened demand
from China and a growing public call to cut carbon emissions.
The company slashed its quarterly dividend in January as it
warned its first-quarter loss would be wider than expected. Earlier
this week, top executives said they would take voluntary and
temporary pay cuts for the rest of the calendar year.
Peabody on Thursday projected another big loss for the current
quarter at 49 cents to 59 cents a share. Analysts have projected a
loss of 35 cents a share.
Coal generation in the U.S. fell 14% during the latest quarter,
alongside a 14% increase in natural gas generation, according to
the company. Peabody now expects U.S. coal demand to drop 80
million to 100 million tons this year, with accelerating production
cuts occurring in the second half of the year, and cut its capital
expenditure forecast to $170 million to $190 million, from an
earlier expectation of $180 million to $200 million.
In all, Peabody reported a loss of $176.6 million, or 65 cents a
share, wider than its year-earlier loss of $48.5 million, or 18
cents a share. Excluding items, the company's per-share loss
widened to 62 cents from 19 cents.
The company had projected an adjusted loss of 32 cents to 39
cents.
Revenue slid 5.5% to $1.54 billion, due to lower pricing and a
shift in U.S. production mix toward the Southern Powder River
Basin. Sales volume fell 1.1%.
Analysts had projected revenue of $1.6 billion.
The company's Australian mining business swung to an operating
loss of $24.5 million, versus a profit of $1.8 million a year
earlier, on account of hedging losses. Before hedging, Australian
operations rose $40.9 million to $61.9 million.
Meanwhile, fellow coal company Arch Coal Inc. this week cut its
coal volume guidance for the year, citing deteriorated industry
conditions. Coal producer Xinergy Ltd. recently filed for Chapter
11 bankruptcy protection while Walter Energy Inc. skipped an
interest payment on its debt.
Peabody shares, down 72% over the past year, were little changed
in premarket trading.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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