The company has initiated actions to reduce the employee and contractor positions at multiple metallurgical and thermal coal mines in Australia, according to the company.
“These actions are aimed at increasing productivity, lowering costs and improving cash flows, while reducing metallurgical coal volumes for sales when markets improve,” it said.
“The company plans to provide additional details regarding the future benefits of these programs and any targets in its second quarter earnings release scheduled for Tuesday, July 28.”
The company estimated that it will receive another $US20 million hit in the second quarter because of the lower Australian coal price, with about half related to spot coal sales during the quarter and half related to reduced coal inventory valuation due to benchmark third quarter settlements. These charges were not included in the company's previous financial targets.
Spot metallurgical coal prices have declined 15% during the quarter before increasing in recent weeks.
About half of the charges are associated with the previously announced corporate and regional staff reductions, with the other half related to Australia mine site-related workforce reductions.
In early June Peabody announced a reduction of about 250 positions, or 25% of its corporate and regional staff, with expected annual savings of $40 to $45 million when fully implemented later this year.
Peabody expects a timing-related impact of about $40 million in the second quarter as a result of a series of substantial rain and flash flooding events in the Southern Powder River Basin primarily in June that reduced production by 5.0 to 5.5 million tons.
Peabody has largely resumed normal production levels, and is scheduling to make up the deferred shipments in the third and fourth quarters, it said.