Reuters: Hot Stocks: UPDATE 3-Peabody earnings beat, sees U.S. thermal recovery

Reuters: Hot Stocks Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

UPDATE 3-Peabody earnings beat, sees U.S. thermal recovery Apr 18th 2013, 16:13 Thu Apr 18, 2013 12:13pm EDT * Revenue down 14 pct to $1.75 billion on weak coal prices * Company leaves full-year sales targets unchanged * Sees U.S. thermal coal taking back share from natural gas * Australian margins sharply lower (Adds comments on U.S. thermal coal market, share price moves.) April 18 (Reuters) - Peabody Energy Corp, the world's largest private sector coal miner, reported a smaller-than-expected first-quarter loss on Thursday and said it expects thermal coal to claw back much of the U.S. market share it has lost to natural gas. Its shares rose 7.4 percent to $20.40. Peabody is the first of the major U.S. coal producers to report first quarter results, and shares of its rivals, including Alpha Natural Resources Inc and Arch Coal Inc , also rose sharply. "We now expect that during 2013, coal will recapture the vast majority of its 2012 demand that was lost to natural gas," Chief Executive Gregory Boyce said in a statement. Weak prices for both metallurgical coal, used to make steel, and thermal coal, typically used to produce electricity, have battered U.S. coal producers in recent quarters. This came as hydraulic fracturing boosted gas production and sent gas futures prices to a 10-year low last April. Many power producers switched to natural gas from coal. But New York Mercantile Exchange natural gas futures have more than doubled from last year's lows as demand rises. COST CUTS PAY OFF Peabody and its peers have pushed to cut costs in the tough market, and Brean Capital analyst Lucas Pipes said in a note to clients that the better than expected results partly reflected lower costs in the company's Australian segment. Peabody boosted its presence in Australia, and thus its access to key Asian markets, in late 2011, acquiring Macarthur Coal for nearly $5 billion. The company had hoped that strength in that business would offset weakness in the United States. Even so, first quarter margins dropped sharply in the Australian coal business as falling prices more than offset the cost-cutting measures. Miners like Peabody that can ship metallurgical coal abroad see big potential in selling to Asian steelmakers. But seaborne prices have been weak in recent quarters. "While recent market dynamics have not yet translated into expected seaborne price increases, we see another year of import growth from China and India, growing Chinese steel production, and new coal generation being built around the globe," Boyce said. Peabody said the lower prices for Australian coal and a slide in total U.S. shipments hit revenue, which dropped 14 percent to $1.75 billion. Analysts, on average, had been expecting $1.78 billion, according to Thomson Reuters I/B/E/S. MAINTAINS TOTAL SALES TARGETS For the current quarter, Peabody forecast results between an adjusted loss of 25 cents a share and an adjusted profit of 1 cent a share. It expects Australian volumes to rise. Peabody maintained its full-year sales targets and said it now expects its costs per short ton in the United States to fall 2 and 3 percent from 2012. The first-quarter net loss attributable to common shareholders was $23.4 million, or 9 cents a share, compared with earnings of $172.7 million, or 63 cents, a year earlier. The adjusted loss from continuing operations was 5 cents a share, compared with analysts' average forecast of a loss of 14 cents. (Reporting by Allison Martell; editing by John Wallace and Sofina Mirza-Reid) Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions