Peabody Energy's Third-Quarter Net Income Doubles on Higher Coal Shipments

Peabody Energy Corp., the largest U.S. coal producer, said third-quarter profit more than doubled as shipments of the fuel increased.

Net income climbed to $224.1 million, or 83 cents a share, from $106.8 million, or 40 cents, a year earlier, St. Louis- based Peabody said today in a statement. The company was expected to earn 93 cents a share, according to the median of nine analyst estimates compiled by Bloomberg. Sales rose 12 percent to $1.86 billion from $1.67 billion.

Chief Executive Officer Gregory Boyce, 56, profited from higher metallurgical coal prices and increased shipments as the economy recovered from the worst recession since the 1930s. U.S. raw steel output averaged 1.712 million tons during the quarter, up 23 percent from a year earlier, according to the American Iron and Steel Institute.

“The earnings result is mildly positive,” said Daniel Scott, an analyst at Dahlman Rose & Co. in New York. “Their production at Powder River Basin looks to be pretty strong.”

Peabody fell 19 cents, or 0.4 percent, to $51.34 at 12:48 p.m. in New York Stock Exchange composite trading. The shares have gained 14 percent this year.

Powder River

Spot prices in the Powder River Basin, which holds the largest and least expensive U.S. coal reserves, have risen 60 percent this year, according to Peabody.

The company has sold 90 percent of its 2011 production from the basin, Boyce said on a conference call with analysts. The company is exporting coal from the basin to Europe, Peabody said on the call, without providing additional detail.

Metallurgical coal is used to produce steel, while the thermal form of the fuel is consumed by utilities to generate electricity.

Peabody raised the lower end of its full-year earnings targets, with earnings before interest, taxes, depreciation and amortization forecast to range between $1.85 billion and $1.9 billion and adjusted earnings per share of $2.95 to $3.15, excluding currency adjustments.

Third-quarter Ebitda totaled $571.3 million, up 67 percent from a year ago, the company said. Peabody projected in July that third-quarter Ebitda would be $475 million to $550 million.

Revenue in Australia jumped 36 percent to $733.4 million. Peabody sold 7.4 tons of coal in the country, up from 6.5 tons last year.

The company said it plans to sell 240 million to 260 million tons of coal this year, compared with 243.6 million in 2009, because of increased demand in the Asia Pacific region.

Arch Coal Inc., also based in St. Louis, is the second- biggest U.S. coal producer, followed by Alpha Natural Resources Inc., in Abingdon, Virginia.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net; Moming Zhou in New York at Mzhou29@bloomberg.net;

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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