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Peabody Jumps on Surprise Profit, Lower Mining Cost Forecast

Peabody Energy Corp., the largest U.S. coal producer, rose the most in more than a week after reporting a surprise profit and forecasting lower mining costs.

Peabody advanced 5 percent to $17.14 at the close in New York, the most since July 11.

The St. Louis-based company’s second-quarter net income of 33 cents a share compared with the 5-cent loss that was the average of 23 analysts’ estimates compiled by Bloomberg.

Its Australian mines, which produce metallurgical coal for export, saw output rise 4.9 percent in the period while employing fewer full-time workers and contractors, the company said today in a statement. Costs there will fall to “the mid- $70 per ton range” in 2013, compared with a previous estimate of $80 a ton.

“When volumes increase and companies hunker down on costs they are sometimes able to achieve savings better than expectations,” Jeremy Sussman, an analyst at Clarkson Capital Markets in New York, said by phone today.

Sales fell to $1.73 billion in the quarter from $1.98 billion, trailing the $1.81 billion average of 13 estimates.

Peabody forecast third-quarter earnings before interest, taxes, depreciation and amortization will be $210 million to $270 million. The average of 13 estimates compiled by Bloomberg is for Ebitda of $268 million.

The company said U.S. mining costs will drop as much as 3 percent this year.

Domestic coal consumption rose 9.5 percent in the quarter, according to U.S. Department of Energy’s Energy Information Administration data. The EIA expects domestic use to increase 6.7 percent this year as electricity demand climbs and prices rise for natural gas, a competing fuel burned at power plants.

Coal from Peabody’s U.S. operations is cheaper for utilities to burn than gas, the price of which has almost doubled from a decade low in April 2012.

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