Peabody Energy posts huge loss on weak coal fundamentals

US coal miner Peabody Energy (NYSE:BTU), the world’s largest privately owned producer of the fossil fuel, reported on Wednesday a fourth-quarter loss of $289.8 million, a notable reversal of fortunes from a year ago, when it posted a profit.

For the year, the mining firm reported a loss of $211.3 million, or $2.04 per share, swinging to a loss. Revenue was reported as $4.62 billion.

The St. Louis-based company blamed converging issues, including a mild Northern winter, low natural gas prices, as well as trade and import policy uncertainties, for the bad performance.

Peabody was bleak on its outlook for 2020, saying it expected further weakness in the market during the first half of the year.

The world’s largest privately-owned coal producer expects further weakness in the market during the first half of the year.

“Peabody Energy is getting hammered by weak coal industry fundamentals and escalating environmental, social and governance (ESG) concerns,” Moody’s lead coal analyst, Benjamin Nelson, said in a note to investors.

The coal miner is taking a “live within our means” approach, which means adopting more conservative financial policies, such as reducing capital spending, suspending dividend and eliminating share repurchases.

For 2020, Peabody has earmarked about $250 million for capital expenditure, 12% lower than last year’s actual capex.

“While these actions will help preserve cash and the company has good liquidity today, we expect EBITDA will be down meaningfully and the company will be challenged to generate positive free cash flow in 2020,” Nelson noted.

The company also inked a deal with activist investor Elliott Management, its largest shareholder, and will appoint several new members to the company’s board.

The announced new board members include Elliott Management ‘s equity partner Dave Miller, Elliott Management’s portfolio manager Samantha Algaze and coal industry executive Darren Yeates.

Peabody said it would nominate each of the new directors, along with all current directors, for a full one-year term in May at the company’s upcoming annual meeting of shareholders.

“We are convinced that Peabody has significant unrealised potential,” Miller said.

Investors reacted positively to the announcement, sending Peabody’s shares up 25.6% to $9.31. A year ago the stock was trading at $33.68 a piece.

News No: 8405
Date: 2020/02/06 - 14:11
News Source:

Elliott Management  coal miner  coal  Peabody Energy 


Leave a Comment:


India’s cabinet to consider coal block auction plan

India's coal ministry will seek approval soon from the country's federal cabinet to launch the first auction of coal blocks for commercial mining, with the aim of issuing tender documents in the 2019-2020 fiscal year ending on 31 March.

2020 to be pivotal for coal miners — report

After a Jekyll and Hyde year in 2019, and a decade characterised by China’s disruption of the met coal trade, participants can be forgiven for being sick of change. But research firm Wood Mackenzie believes a shift toward consistency and stability is probably too much to ask for in 2020 as China continues to play powerbroker over the seaborne market and spot pricing.

Virus-hit China may need more imports of coal. The tricky part – shipping it there: Clyde Russell

China’s domestic coal mines are struggling to ramp up production in the face of the ongoing coronavirus epidemic. That’s a situation that may seem positive for seaborne exporters, but in reality it may be challenging for miners to take advantage.

BHP looks to India for coal growth as China demand declines

The world’s biggest miner BHP (LON: BHP) is looking to India’s fast-growing economy and its accelerating steelmaking output as a way to help offset the declining Chinese coal demand in the new decade, The Sydney Morning Herald reported.

Teck doubles coking coal capacity from Ridley Terminals

Canadian coking coal producer Teck Resources has signed an expanded commercial agreement with port operator Ridley Terminals to double coking coal throughput capacity from the Prince Rupert, British Columbia export terminal.

India pushes ahead with coal sector reforms

India's coal ministry has identified as many as 40 coal blocks with an estimated production capacity of 150mn t/yr for its maiden commercial coal mining auction to be held before the financial year ends in March.
Upcoming Events
 Mines & Metals

Mine & Business Today

 Scrap & Recycling


Our partners