Coal demand pumps up Peabody earnings

GLOBAL demand for coal and clever growth initiatives prompted the 61% growth in Peabody Energy's second-quarter earnings the company reported Thursday.
Coal demand pumps up Peabody earnings Coal demand pumps up Peabody earnings Coal demand pumps up Peabody earnings Coal demand pumps up Peabody earnings Coal demand pumps up Peabody earnings


Staff Reporter

The company’s net income was $153 million or 57c a share for the quarter, up from $95.3 million, or 36c a share last year. Revenue surged 19% to $1.32 billion from $1.11 billion for the same quarter last year, as the company increased coal sales by 3.1 million tons.


Peabody president and chief executive Gregory H Boyce said Peabody's record earnings reflected the strength of its diverse portfolio and growth initiatives.


“During the quarter, Peabody reached major milestones in our growth strategies. We significantly strengthened our operating base through major equipment installations and the start-up of two new mines, we advanced our international growth platform with the acquisition of Excel Coal, and we entered into an agreement to evaluate two coal-to-liquids facilities.”


During the second quarter, Peabody signed an agreement to acquire Excel Coal for $US1.34 billion plus assumed debt of approximately $US190 million. The transaction is expected to close in the fourth quarter and be accretive to earnings and cash flows in 2007.


Chief financial officer and executive vice-president of corporate development Richard A Navarre said the Excel acquisition would triple Peabody's position over the next several years in the world's largest coal exporting nation.


“The transaction would provide a significant growth platform from several major expansion projects, serving the fastest growing markets in the world. And it would add more than 500Mt of metallurgical and thermal reserves to drive long-term growth.”


Peabody now targets full-year 2006 results, excluding acquisition-related impacts, with EBITDA of $1.05-1.15 billion and earnings of $2.00-2.43 per share.


Full-year 2006 production targets remain at 230-240Mt with total sales of 255-265Mt. Peabody targets third quarter EBITDA of $250-300 million and earnings per share of 35-55c.


“Coal demand continues to set records in the United States and globally, and the long-term coal outlook continues to strengthen,” Boyce said.

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