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Released July 23, 2014 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Executives at Peabody Energy Corporation (NYSE:BTU) (St. Louis, Missouri), the world's largest private-sector coal company, are optimistic about the company's international prospects following mixed results for second-quarter 2014. Weaker global prices, particularly in Australia, and tough competition with natural gas offset a recovery in U.S. coal sales. Industrial Info is tracking $249 million in active and unconfirmed projects involving Peabody.
Among the projects that Industrial Info is tracking as part of its Global Metals & Minerals Project Database is $175 million in expansions and additions at the Gateway North underground coal mine in Coulterville, Illinois. The project involves expanding the 3.2 million-ton-per-year thermal room and pillar coal mine in two phases: adding a mine slope and extending the beltline to access 280 million tons of additional reserves, increasing capacity by as much as 40%; and upgrading and modifying the preparation plant to handle additional feed. The project is expected to be completed in the first quarter of 2016.
View Plant Profile - 1057810
View Project Report - 300017772
Industrial Info also is following Peabody's Australian operations, such as the planned $17.82 million addition of a belt press filter at its 7.7 million-ton-per-year Wilpinjong aboveground coal mine & processing plant, which is north of Mudgee, New South Wales. The project is expected to be completed sometime this quarter. SNC-Lavalin Australia Pty Limited (Brisbane, Queensland) is performing design-engineering services.
View Plant Profile - 1063702
View Project Report - 300122754
The company reported a net loss of $73.3 million, compared with net income of $90.3 million in second-quarter 2013. Peabody executives stressed that results were different when excluding the effects of depreciation; depletion; amortization; income tax provisions; asset impairments; interest expenses; asset retirement obligations; income and losses from discontinued operations; and net income and losses attributable to non-controlling interests. Using this measurement, called "adjusted EBITDA," income stood at $213.1 million, a 16.2% decrease from second-quarter 2013.
Total revenues were reported to be $1.76 billion, a 1.9% increase from the same period last year, as sales volumes strengthened by 1% and pricing was finalized for a major long-term sales agreement in the Western U.S. In particular, stronger business in the Western U.S. offset a drop in Midwestern volumes and revenues; for the country as a whole, higher price realizations and reduced costs led to a 5% increase in volumes. In a quarterly conference call, Gregory H. Boyce, the chairman and chief executive officer of Peabody, noted that U.S. coal demand has been increasing for about two years.
Weaker realized prices caused Australian revenues to decline.
Capital expenditures for the quarter were reported to be $40.3 million, compared with $92.5 million in the second quarter of 2013. As a result of companywide cost-efficiency measures adopted over the past year, the capital expenditure target for full-year 2014 has been lowered to between $210 million and $250 million. The cost-efficiency measures helped Peabody offset the effects of lower seaborne coal prices, which had a $155 million impact.
Peabody executives expect 2014 U.S. coal demand to increase 30 million to 40 million tons over 2013 levels. The recent repeal of Australia's carbon tax is expected to boost the nation's coal industry. Total sales targets for 2014 recently were adjusted to between 185 million to 190 million tons in the U.S. and 35 million to 37 million tons in Australia. While U.S. costs are expected to be generally lower than those of 2013, thanks to cost-reduction plans, revenues are expected to be between 4% and 7% lower due to pricing issues.
Peabody also sees a major opportunity in China, where accelerating economic growth is expected to boost steel production and demand for metallurgical imports. Other countries that offer opportunities are India, where the government plans to increase coal imports to meet rapidly rising demand, and Japan, where natural gas is largely imported and much of the nuclear capacity remains shut down.
"The seaborne coal markets remain oversupplied, but we are seeing some signs of rebalancing," Boyce said in the conference call. "Coal demand is expected to rise in the second half of the year on improved global economic growth, as a result of additional Chinese stimulus, Asian expansion, and improving Atlantic steel requirements. We project further improvement within the metallurgical coal markets in 2015 as production growth slows and demand continues to increase."
He added: "We believe the long-term outlook for metallurgical coal demand remains solid, and is supported by growing steel intensity from ongoing urbanization trends in Asia. It's estimated that some 70 million people per year will migrate to cities by 2020, requiring more coal to meet rising steel demand."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Among the projects that Industrial Info is tracking as part of its Global Metals & Minerals Project Database is $175 million in expansions and additions at the Gateway North underground coal mine in Coulterville, Illinois. The project involves expanding the 3.2 million-ton-per-year thermal room and pillar coal mine in two phases: adding a mine slope and extending the beltline to access 280 million tons of additional reserves, increasing capacity by as much as 40%; and upgrading and modifying the preparation plant to handle additional feed. The project is expected to be completed in the first quarter of 2016.
View Plant Profile - 1057810
View Project Report - 300017772
Industrial Info also is following Peabody's Australian operations, such as the planned $17.82 million addition of a belt press filter at its 7.7 million-ton-per-year Wilpinjong aboveground coal mine & processing plant, which is north of Mudgee, New South Wales. The project is expected to be completed sometime this quarter. SNC-Lavalin Australia Pty Limited (Brisbane, Queensland) is performing design-engineering services.
View Plant Profile - 1063702
View Project Report - 300122754
The company reported a net loss of $73.3 million, compared with net income of $90.3 million in second-quarter 2013. Peabody executives stressed that results were different when excluding the effects of depreciation; depletion; amortization; income tax provisions; asset impairments; interest expenses; asset retirement obligations; income and losses from discontinued operations; and net income and losses attributable to non-controlling interests. Using this measurement, called "adjusted EBITDA," income stood at $213.1 million, a 16.2% decrease from second-quarter 2013.
Total revenues were reported to be $1.76 billion, a 1.9% increase from the same period last year, as sales volumes strengthened by 1% and pricing was finalized for a major long-term sales agreement in the Western U.S. In particular, stronger business in the Western U.S. offset a drop in Midwestern volumes and revenues; for the country as a whole, higher price realizations and reduced costs led to a 5% increase in volumes. In a quarterly conference call, Gregory H. Boyce, the chairman and chief executive officer of Peabody, noted that U.S. coal demand has been increasing for about two years.
Weaker realized prices caused Australian revenues to decline.
Capital expenditures for the quarter were reported to be $40.3 million, compared with $92.5 million in the second quarter of 2013. As a result of companywide cost-efficiency measures adopted over the past year, the capital expenditure target for full-year 2014 has been lowered to between $210 million and $250 million. The cost-efficiency measures helped Peabody offset the effects of lower seaborne coal prices, which had a $155 million impact.
Peabody executives expect 2014 U.S. coal demand to increase 30 million to 40 million tons over 2013 levels. The recent repeal of Australia's carbon tax is expected to boost the nation's coal industry. Total sales targets for 2014 recently were adjusted to between 185 million to 190 million tons in the U.S. and 35 million to 37 million tons in Australia. While U.S. costs are expected to be generally lower than those of 2013, thanks to cost-reduction plans, revenues are expected to be between 4% and 7% lower due to pricing issues.
Peabody also sees a major opportunity in China, where accelerating economic growth is expected to boost steel production and demand for metallurgical imports. Other countries that offer opportunities are India, where the government plans to increase coal imports to meet rapidly rising demand, and Japan, where natural gas is largely imported and much of the nuclear capacity remains shut down.
"The seaborne coal markets remain oversupplied, but we are seeing some signs of rebalancing," Boyce said in the conference call. "Coal demand is expected to rise in the second half of the year on improved global economic growth, as a result of additional Chinese stimulus, Asian expansion, and improving Atlantic steel requirements. We project further improvement within the metallurgical coal markets in 2015 as production growth slows and demand continues to increase."
He added: "We believe the long-term outlook for metallurgical coal demand remains solid, and is supported by growing steel intensity from ongoing urbanization trends in Asia. It's estimated that some 70 million people per year will migrate to cities by 2020, requiring more coal to meet rising steel demand."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
