Tuesday, January 27, 2009

Q4 Profits Up Sharply At Peabody Energy

Fourth-quarter profits at US-based coal miner, Peabody Energy, grew more than eight times, largely due to increased revenues from its Australian operations. Net income for the quarter was $293.3 million, compared with $35.8 million the previous year.

Full-year 2008 revenues grew 45 percent to a record $6.59 billion on 256 million tons. Higher revenues reflect increased volumes and improved prices throughout the United States and Australia. Revenues per ton in the United States grew 15 percent, and Australian revenues per ton rose 76 percent, reflecting the higher-priced metallurgical and thermal coal associated with annual contracts that commenced April 1, 2008.

The company has reported record full-year 2008 EBITDA from continuing operations of $1.85 billion, nearly doubling prior-year levels. 2008 earnings from continuing operations totalled $3.63 per share on income of $984.8 million, significantly exceeding comparable 2007 levels of $1.63 per share and $440.0 million, respectively. The company also set a new mark for revenues of $6.59 billion on coal sales of 256 million tons.

"Peabody delivered record financial results, driven by a series of strategic actions taken in recent years to expand access to high-margin global markets and increase the productivity and reliability of the operating base," said Peabody Chairman and Chief Executive Officer Gregory H. Boyce. "We have performed very well and are in an excellent position to unlock the full benefits of our global platform when world economies rebound and high growth in energy demand resumes. Amid challenging near-term markets, we enter 2009 with a sound financial position and will pursue opportunities to further strengthen the portfolio."

Full-year EBITDA totalled $1.85 billion compared with $968.6 million in 2007. Contributions from U.S. operations increased 8 percent to $858.6 million on improved pricing and volume. Full-year Australian EBITDA was $1,017.0 million, more than six times higher than the prior year's $166.1 million on a combination of increased volumes related to new and expanded mines and higher prices. Trading and Brokerage and Resource Management activities added $274.3 million of EBITDA.

Operating cash flows totaled $1.41 billion, significantly exceeding prior- year levels. Income from continuing operations of $984.8 million more than doubled year-ago levels, with earnings per share of $3.63. Full-year net income totaled $953.5 million.

"Our results demonstrate the capability of our operating platform to deliver substantial cash flows," said Executive Vice President and Chief Financial Officer Michael C. Crews. "We are positioned to weather the global economic downturn with nearly $2 billion of available liquidity from our cash balances and lines of credit."

"We are seeing a sharp global supply response to temporarily reduced demand, through voluntary coal supply and capital spending reductions," said Peabody President and Chief Commercial Officer Richard A. Navarre. "Peabody has trimmed production targets in both the United States and Australia and now enters 2009 with a highly committed book of business. We believe the ultimate recovery could be strong, as global economic and electricity generation growth resumes, at the same time that geologic and regulatory hurdles and lack of available capital limit a supply response."

Global coal demand increased 2.0 percent in 2008 to meet growth in electricity demand, primarily in emerging economies. 2009 coal demand will be impacted by the global pullback in steel production and moderate softness in global electricity generation, offset by growth from new generation and increased market share for coal. In response to current economic conditions, global coal production cuts have been accelerating, with more than 70 million tons of known thermal and metallurgical production reductions already announced.

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