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Peabody, which said in April that it expected 2011 second quarter earnings to benefit from increasing volumes and prices in Australia offset slightly by lingering effects of the Queensland floods, is investing heavily in Asia as it sees a “long term super-cycle” in coal.
Analysts are expecting the company to improve on last quarter’s result, which also had a healthy contribution from its Australian operations.
Increased coal price spikes related in part to flooding in Australia helped Peabody pocket a profit and a healthy rise in revenues in the first quarter.
For the period ended March 31, the producer reported revenues of $US1.74 billion, a 15% rise year-on-year, driven by higher Australian prices and an increase in US coal volumes. Income from continuing operations rose 31% to $179.6 million.
Consolidated sales in the quarter totalled 61.2 million tons, versus 58.3Mt a year ago. The continued ramp-up of the company’s newest large mine, Bear Run, and higher demand both helped shipment numbers increase 9% to 51.4Mt.
In Australia, Peabody is working to expand six major metallurgical and thermal export operations. It is also advancing growth efforts and commercial deals in China, Indonesia and India.
Last week Macarthur confirmed it had reached agreement with the ArcelorMittal-Peabody subsidiary BidCo on the timing and scope of a due diligence process to be undertaken to facilitate the proposed offer.
As part of this agreement, BidCo has agreed that in the event that BidCo makes an offer at any time in the next 12 months, the offer price will be no less than $A15.50 per share unless the Macarthur board expressly consents otherwise or there is a competing offer. Up to 16c per share of any final dividend for FY2011 declared by the Macarthur board will not be deducted from the offer price.
Earlier this month Peabody firmly extended its reach into Asia after being awarded the rights to develop Mongolia’s Tavan Tolgoi deposit with Chinese coal giant Shenhua and a Russian-Mongolian consortium.
Peabody had seemed a dark horse in the contest, with reports that it was behind Vale in the running to co-develop the 15 million tonnes per annum coal mine.
The mine also has an estimated 1.2 billion tonnes of reserves.
