Peabody Energy’s fiscal 2015 guidance and market expectations
Fiscal 2015 will be crucial for American coal producers. The trajectory of coal prices will determine who survives and who will wave the white flag.
Despite their production overcapacity, Australian met coal producers are better off than their American counterparts due to their location advantage.
The retirement of coal-fired power plants and the impact of new regulations proposed by the EPA present two major blows to the US thermal coal industry.
Coal stocks fell in 4Q14 as warmer weather undermined demand for energy commodities. Oil prices also fell, cascading to declining energy stock prices.
Peabody Energy beat its own guidance of shipments in 4Q14. US shipments came in at 49.2 million tons against implied guidance of 45.3 million tons.
Peabody Energy’s debt at the end of 2014 was $6 billion. Peabody acquired much of this debt in 2011 to fund acquisitions made when coal prices were high.
In fiscal 2014, Peabody Energy’s net losses increased to $777.3 million ($2.94 a share) from $524.9 million ($1.97 a share) in fiscal 2013.
Among the major coal producers, Peabody Energy, Arch Coal, and Cloud Peak Energy reported a drop in adjusted EBITDA in fiscal 2014.
Peabody’s Australian operations drove overall cost savings in fiscal 2014 due to cost saving measures, lower oil prices, and the weaker Australian dollar.
Australian operations As we discussed in Part 3, Peabody Energy Corporation’s (BTU) Australian operations produce both thermal and met coal, which is used in steelmaking. Peabody operates three mines in New South…
Peabody Energy’s US operations sold 191.4 million tons of thermal coal in fiscal 2014, 3.4% higher than fiscal 2013’s 185.1 million tons.
Peabody Energy’s net losses narrowed to $513.0 million, or $1.92 a share, in 4Q14 from $561.2 million in 4Q13, or $2.12 a share.
Gross margin per ton for Peabody’s US operations were $5.04 in 4Q14, compared to $5.90 in 4Q13.
Peabody Energy reported Midwest production costs of $34.85 a ton in 4Q14, compared to $35.47 a ton in 4Q13.
In its US and Australian operations, plus the trading segment, Peabody Energy reported revenues of $1.68 billion in 4Q14 compared to $1.74 billion in 4Q13.
Peabody Energy Corporation’s US operations sold 49.2 million tons in 4Q14, 4% higher than 4Q13’s 47.3 million tons.
Peabody Energy is the largest reserve holder and producer in the Powder River Basin, including the world’s largest mine—the North Antelope Rochelle Mine.
Coal industry players have responded to a tough scenario by taking extreme measures. They’re idling mines, cutting production, and selling noncore assets.
Arch Coal share price increased a whopping 15.7% on February 3 due to stellar cost performance and a positive outlook for Powder River Basin coal.
Arch Coal’s cash balance dropped to $734.2 million in 4Q14, from $795.9 million in 3Q14, primarily due to adverse moments in working capital.
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