Peabody Beats Estimates After Australia Coal Output Rises

Peabody Energy Corp., the largest U.S. coal producer by sales, reported a narrower-than-expected loss for the third quarter after higher output at mines in Australia helped lessen the impact of lower prices.

Excluding one-time items, the loss was 59 cents, the St. Louis-based company said today in a statement. The average of eight analysts’ estimates compiled by Bloomberg was for a loss of 66 cents.

Revenue fell 4.2 percent to $1.72 billion, beating the $1.64 billion average estimate. Peabody shares were up 4 percent at $11.47 at 9:38 a.m. in New York.

The company mined 10 million tons in Australia in the period, up from 9 million tons a year earlier, while volumes were lower at Peabody operations in the U.S. Midwest and West. The cost performance in Australia was better than expected, Michael S. Dudas, an analyst at Sterne Agee & Leach Inc., said in a note.

Peabody said there are some positive signals about the coal industry, which is in its worst downturn in decades amid slumping prices and tepid demand. Prices for metallurgical coal, which are at a six-year low amid a slowdown in demand from Chinese steelmakers, may begin to rise as most of the supply cutbacks announced so far by the industry still haven’t taken effect.

Still, the company also predicted U.S. coal consumption will rise by just 15 million tons this year. In July, the company estimated a gain of 30 million to 40 million tons.

Rail Bottlenecks

Peabody’s largest U.S. mining operation, in Wyoming’s Powder River Basin, has suffered from bottlenecks in railroads. That left utility stockpiles of coal at their lowest levels since 2005, Peabody said.

“We look forward to greater realization of announced metallurgical coal supply cutbacks, continued growth in Indian coal imports, and improving Southern Powder River Basin rail performance to rebuild utility stockpiles and meet strong underlying demand,” Chairman and Chief Executive Officer Greg Boyce said in the statement.

The third-quarter net loss was 56 cents a share compared with 10 cents a year earlier. Peabody said its full-year loss excluding one-time items will be $1.48 to $1.38 a share. The average of 13 estimates is for a $1.39 loss.

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