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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