Peabody Energy Corp., the largest U.S. coal producer by volume, reported third-quarter earnings that beat analysts’ estimates after selling more coal from its mines in Australia and Wyoming’s Powder River Basin.
Excluding discontinued operations and a charge related to foreign income tax accounts, per-share profit exceeded the 34- cent average of 25 estimates compiled by Bloomberg. Sales rose to $2.06 billion from $2.04 billion. Net income fell to $42.9 million, or 16 cents a share, from $274.1 million, or $1, a year earlier, the St. Louis-based company said today in a statement.
Coal sales rose 5.9 percent to 66.6 million tons in the quarter, compared with 62.9 a year earlier. Sales at Peabody’s Australian mining division climbed 39 percent to 8.5 million tons as sales from its western U.S. operations rose 0.7 percent to 44 million tons.
“We are seeing record global coal imports, increasing coal generation, and improving U.S. coal consumption from higher natural gas prices,” Greg Boyce, Peabody’s chairman and chief executive officer, said in the statement.
Higher natural gas prices encouraged some electricity generators to resume burning coal from the Powder River Basin, Mitesh Thakkar, an analyst at FBR & Co. in Arlington, Virginia, wrote in an Oct. 18 note. Thakkar rates the shares outperform, the equivalent of a buy. Gas prices rose 23 percent from the prior three months to average $2.893 per million British thermal units in New York during the third quarter.
“At those prices, we believe utilities should favor PRB and ILB coals over natural gas,” Thakkar said in the note, referring to the Powder River Basin and the Illinois Basin in the U.S. Midwest.
Peabody rose 11 percent to $28.82 in at 9:35 in New York. The shares have declined 22 percent this year.
Peabody forecast full-year earnings before interest, taxes, depreciation and amortization will be $1.75 billion to $1.85 billion on an adjusted basis, or $2.10 to $2.30 a share, higher than the $1.81 average of 28 estimates compiled by Bloomberg.
Australian production volumes rose to a record, largely offsetting price declines, Boyce said in the statement. China’s imports from Australia have more than doubled, according to the statement.
(Peabody scheduled a conference call to discuss results at 11 a.m. in New York, accessible at EVTS <GO>.)