Peabody profit estimates beaten by cost cuts, China coal demand
Coal miner Peabody Energy Corp., who was offered a contract to develop Tavan Tolgoi's West Tsankhi, raced past analysts' estimates as cost cuts started to pay off and sales volumes in Australia climbed on a pick-up in demand from China, sending its shares up as much as 14 percent.
Record shipments in Australia offset rising production costs during the third quarter, Peabody Energy said. The company is looking to fund projects that are nearing completion rather than investing in new ones, aiming at increasing volumes even as prices fall.
“While the global coal environment remains challenged, there are indications that markets are stabilizing through U.S. gas-to-coal switching, higher European coal-fueled generation and increased China infrastructure spending,” chief executive Gregory Boyce said.
Lower prices, weak demand and high-cost Australian operations have forced coal producers to cut costs this year. Prices have fallen about 20 percent in the first half of this year.
Peabody Energy said on Monday it would save about USD 100 million primarily through workforce reductions. The company raised the lower-end of its full-year sales forecast by 10 million tons. Total sales for 2012 are expected to be between 240 million and 250 million tons.
Record shipments in Australia offset rising production costs during the third quarter, Peabody Energy said. The company is looking to fund projects that are nearing completion rather than investing in new ones, aiming at increasing volumes even as prices fall.
“While the global coal environment remains challenged, there are indications that markets are stabilizing through U.S. gas-to-coal switching, higher European coal-fueled generation and increased China infrastructure spending,” chief executive Gregory Boyce said.
Lower prices, weak demand and high-cost Australian operations have forced coal producers to cut costs this year. Prices have fallen about 20 percent in the first half of this year.
Peabody Energy said on Monday it would save about USD 100 million primarily through workforce reductions. The company raised the lower-end of its full-year sales forecast by 10 million tons. Total sales for 2012 are expected to be between 240 million and 250 million tons.
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