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UPDATE 1-Peabody keeps costs under control in Australia
October 20, 2014 / 2:21 PM / 3 years ago

UPDATE 1-Peabody keeps costs under control in Australia

(Adds forecast, details)

Oct 20 (Reuters) - Coal miner Peabody Energy Corp reported a much lower-than-expected quarterly loss as it controlled costs in Australia amid falling prices.

Coal miners are struggling from a drop in demand for steel-making coal and a rail jam in the United States which hampers their efforts to ride on a recovery in thermal coal demand.

Peabody forecast 2014 adjusted loss of $1.38-$1.48 per share. Analysts were expecting a loss of $1.46 per share.

The company also narrowed its 2014 sales forecast to 245-255 million tons. It had earlier expected up to 260 million tons.

Adding to coal miners’ woes, top importer China said this month it would levy import tariffs on the commodity after nearly a decade.

Cliffs Natural Resources Inc said on Friday it would write down the value of its coal and iron ore assets by $6 billion due to weak prices, putting it in breach of debt covenants.

Peabody cut its 2014 capital spending target to $200 million from $220 million.

Chief Executive Gregory Boyce, however, said the company looks forward greater demand from India and production cuts yet to take effect.

The company’s reported net loss from continuing operations of $154 million for the third quarter ended Sept. 30, compared with income of $24 million a year earlier.

Excluding items, the company posted a loss of 59 cents per share, smaller than the average analyst estimate of 66 cents per share, according to Thomson Reuters I/B/E/S.

Revenue fell 4.4 percent to $1.72 billion.

Operating cost in Australia fell about 6 percent to $65.70 per ton. Cowen and Co said the cost in Australia was 9 percent lower thatn their estimate.

Up to Friday’s close, Peabody shares had fallen 40 percent, compared to a 23.06 percent drop in the broader Dow Jones U.S. Coal index. (Reporting by Anannya Pramanick in Bangalore; Editing by Don Sebastian)

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