July 24 (Bloomberg) -- Peabody Energy Corp., the largest U.S. coal producer, fell the most in more than three years after its third-quarter forecast missed analysts’ estimates on falling coal prices and rising costs in Australia.
Peabody dropped 11 percent to $20.55 at the close in New York, the biggest decline since April 15, 2009. The shares have fallen 38 percent this year. The Stowe Global Coal Index dropped 3.1 percent, led by Arch Coal Inc., which tumbled 12 percent to $5.54, followed by Peabody. Alpha Natural Resources Inc. declined 10 percent to $6.22.
Profit excluding one-time items will be 20 cents to 45 cents a share in the third quarter, St. Louis-based Peabody said today in a statement. The average of 23 estimates compiled by Bloomberg was for 65 cents. Full-year sales will be 230 million to 250 million tons, compared with a previous forecast of 235 million tons to 255 million tons.
The price of metallurgical coal shipped from Australia, where Peabody added to its mines with its December acquisition of Macarthur Coal Ltd., averaged $210 a ton in the quarter, compared with $330 a year earlier, according to data compiled by Bloomberg. That decline amplifies difficulties U.S. miners have faced as some domestic electricity companies have cut shipments, substituting cheaper natural gas at their plants.
Peabody got 39 percent of its 2011 revenue from Australian mining, according to data compiled by Bloomberg. In the second quarter, Peabody received $107.45 in revenue per ton for Australian coal compared with $23.43 for the fuel mined at U.S. operations.
“In the last couple of weeks, the market’s trying to determine what it really needs out of Australia,” Peabody’s Chief Executive Officer Gregory H. Boyce said today on a conference call with investors.
Prices tumbled from record highs after Australia’s coal-producing region recovered from flooding amid uncertainty about economic growth in China, the world’s largest steelmaker.
“On the seaborne side, things are still weaker,” Lucas Pipes, a New York-based analyst at Brean Murray Carret & Co., said today in a telephone interview. “With China hitting the breaks a little bit, weaker currency out of India, Europe having its debt crisis, the macro impacts are reflected in met coal prices and also in what these companies are willing to spend to pull the met coal out of the ground.”
Net income dropped 28 percent to $204.7 million, or 75 cents a share, from $284.8 million, or $1.05, a year earlier, the company said. Earnings excluding a tax benefit and other one-time items were 51 cents, lagging behind the 53-cent average of 25 estimates compiled by Bloomberg. Sales were little changed at $2 billion.
The proportion of electricity generated from gas increased to 32 percent in April to equal coal’s share, the EIA said July 6. Cheaper gas and greater environmental regulation has led U.S. coal miners to cut millions of tons of output this year.
Domestic coal demand is at a 24-year low as the fuel accounts for the same share of U.S. electricity generation as gas for the first time in at least four decades, according to the U.S. Energy Information Administration.
Output from Peabody’s mines in the Powder River Basin fell 8 percent to 31.3 million tons in the second quarter from 33.9 million a year earlier, the U.S. Mine Safety and Health Administration reported on July 20. The average price of coal produced in the region fell 37 percent to $7.87 a ton from $12.40 a year earlier, according to data compiled by Bloomberg.
Thermal coal is used in electricity generation while metallurgical coal is combined with iron ore and other materials to produce steel.
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