UPDATE 3-Peabody profit beats estimates; stock at year high
Tue Oct 20, 2009 1:09pm EDT
reuters.com
* Q3 profit drops, but beats estimates
* Company says to double Australian exports
* Shares rise to highest level this year
(Recasts, adds CEO comments on analyst call, updates stock
price)
By Steve James
NEW YORK, Oct 20 (Reuters) - In an announcement that sent
its stock to a year high, coal miner Peabody Energy Corp
(BTU.N) said on Tuesday it would double exports from Australia
as demand from Asian steelmakers shows signs of a rebound from
the recession.
Even though third-quarter profit dropped sharply, the
results beat Wall Street estimates and the company said it was
raising 2009 financial targets as coal prices steadily rise.
"We are seeing early signs of a strong return to
pre-recession levels," Chief Executive Officer Greg Boyce told
Wall Street analysts on a conference call.
"Global economies are improving and in India and China
there is robust demand for steel," he said in discussing
third-quarter profits.
The earnings, while lower, still easily beat estimates and
the company's stock rose as much as 5.4 percent, surpassing the
52-week high of $43.55. The stock pared gains in afternoon
trading after the Dow Jones industrial average .DJI turned
negative but was still up 1 percent at $43.84 on the New York
Stock Exchange.
Peabody, which operates mines in the United States and
Australia, said Pacific markets continue to strengthen, led by
China's and India's demand for metallurgical, or coking coal,
for steelmaking. It said that demand has driven spot prices
above the April 1 benchmarks.
"The forward curves also suggest strong price appreciation
over the next several years," the company said, adding it would
double exports from Australia in the next five years.
Boyce said there would be an increase of 15 percent next
year and that by 2013, Peabody could be exporting 35 million to
40 million tons from Australia.
In its earnings release, the St. Louis-based company said
net income fell to $106.8 million, or 40 cents per share, from
$369.5 million, or $1.35 per share, a year earlier. Adjusted
income from continuing operations was $135.5 million, or 49
cents per share.
Revenue fell to $1.67 billion from $1.89 billion a year
earlier, said the company, whose thermal, or steam, coal fuels
about 10 percent of America's electricity generation.
Analysts on average were expecting earnings of 22 cents per
share and revenue of $1.42 billion, according to Thomson
Reuters I/B/E/S.
"They were strong across the board, Peabody is setting the
bar pretty high for everyone else," said Jeremy Sussman, an
analyst with Brean Murray Carret & Co.
"There was something for everyone -- they had record met
(metallurgical coal) shipments in Australia and volumes were
stronger than expected. And surprisingly, U.S. numbers looked
good, they brought down costs through disciplined management."
Peabody said U.S. revenues per ton increased 11 percent
over the 2008 third quarter due to higher realized prices.
Realized revenues for Australia averaged $82 per ton -- $125
per ton for metallurgical coal and $72 per ton for thermal, or
steam coal, which is used for power generation. That was 33
percent higher than the second quarter, it said.
Total sales volumes totaled 63.5 million tons, down from
65.6 million tons a year earlier. But Australian sales of 6.5
million tons were 30 percent above the second quarter and
Australian metallurgical coal exports were 2.7 million tons,
nearly triple the pace of the first half of 2009.
Peabody raised its 2009 target for earnings before
interest, taxes, depreciation and amortization, or EBITDA, to
$1.2 billion to $1.3 billion. In the second quarter, it had
forecast $1 billion to $1.2 billion.
Earnings per share from continuing operations is targeted
at $1.34 to $1.54 including a tax remeasurement, or $1.60 to
$1.80 excluding the tax effects. Analysts currently expect
$1.47 for the year.
The company is targeting 2009 sales of approximately 190
million tons in the United States and 21 million to 23 million
tons in Australia. Total company sales are expected to be 235
million to 245 million tons. Peabody's earlier 2009 production
estimates were for 185 million to 190 million tons in the
United States and 20 million to 23 million tons in Australia.
(Reporting by Steve James, editing by Gerald E. McCormick,
Dave Zimmerman and Matthew Lewis) |
