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Peabody Energy Profit Rises on Higher Coal Prices

Peabody Energy Corp., the largest U.S. coal producer, said fourth-quarter profit more than doubled on higher prices for the steelmaking ingredient.

Net income climbed to $210 million, or 78 cents a share, from $92.2 million, or 34 cents, a year earlier, St. Louis-based Peabody said today in a statement. The company was expected to earn 76 cents a share, according to the median of seven analyst estimates compiled by Bloomberg. Sales rose 17 percent to $1.82 billion from $1.55 billion

Peabody, led by Chief Executive Officer Gregory Boyce, 56, profited on higher metallurgical coal prices driven by demand from China and India, even as the company lost some production from its Australian operations amid flooding in Queensland.

“Despite floods curbing shipments during the quarter, they were shipping coal in Q4 to the benchmark equivalent of $200 a ton plus, versus $129 a ton last year,” said Jeremy Sussman, an analyst at Brean Murray Carret & Co. in New York.

Peabody rose $1.12, or 1.9 percent, to $59.29 yesterday in New York Stock Exchange composite trading. The shares have increased 31 percent in the past year.

The company said on Dec. 30 it declared force majeure in Queensland, a measure that allows companies to miss contracted deliveries because of circumstances beyond their control. Floods in the state are the worst in 50 years and have forced the evacuation of 4,000 people.

Peabody earlier this month said that it planned to report 2010 earnings before interest, taxes, depreciation and amortization near the midpoint of its July outlook of $1.7 billion to $1.9 billion, below the $1.85 billion to $1.9 billion it forecast in October, citing the flooding.

Queensland’s coking-coal output in the 12 months ending June 30 is forecast to be 177.3 million metric tons, down from an initial projection of 198 million tons, Mines and Energy Minister Stephen Robertson said last week.

Peabody is poised to benefit from the tighter supply as prices increase and offset any lost output, Sussman said.

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

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.

(Peabody scheduled a conference call with analysts and investors to discuss results at 11 a.m. in New York. To listen, go to the company’s Web site at http://www.peabodyenergy.com.)

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net;

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

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