Peabody Energy 2Q profits slide, so do shares

ST. LOUIS — Peabody Energy’s second-quarter earnings tumbled by two-thirds, falling well short of Wall Street expectations as the coal miner released a long-awaited, full-year outlook far lower than analyst forecasts.

Peabody shares slid 5 percent, or $1.81, to $33.02 Tuesday, and dragged down the stock of other coal producers as well.

The St. Louis-based company, one of the world’s biggest coal producers, reported net income of $79.2 million, or 29 cents per share, compared with $233.3 million, or 85 cents per share, in the April-through-June period a year ago.

Revenue tumbled 12 percent to $1.34 billion in the quarter.

Analysts polled by Thomson Financial expected, on average, earnings per share of 49 cents and revenue of $1.44 billion.

Despite lower-than-expected earnings, Chairman and CEO Gregory Boyce insisted Peabody was well-positioned for an eventual rebound.

“Clearly this year is turning out as we expected — quite challenging for the world’s economies and, more specifically, energy producers,” Boyce said during a conference call with analysts. “The global economic downturn is leading to effects that are unprecedented,” fanned by lower coal exports, high stockpiles and soft prices of natural gas.

Peabody sold 59.5 million tons of coal during the quarter, compared with 59.6 million tons during the same period last year.

Peabody, which earlier withheld its full-year outlook, said Tuesday it now expects earnings this year of $1 to $1.40 per share. Analysts polled by Thomson Financial expected, on average, $2.14 per share.

Stifel Nicolaus & Co analyst Paul Forward, in a research note, called Peabody’s guidance for the year “surprisingly weak,” figuring that the company’s earnings outlook for the second half of 2009 included “a strong dose of conservatism.”

Peabody, usually the first big coal miner to release its earnings each quarter, serves as an early indicator of health for the entire sector. And major producer took a hit Tuesday.

Massey Energy fell 93 cents, or 4 percent, to $21.42. Arch Coal gave up 67 cents, or 3.9 percent, to $16.40. Consol Energy fell $1.75, or 5 percent, to $33.37. James River Coal lost 50 cents, or 2.7 percent, to $17.90.

Peabody, whose coal fuels roughly one-tenth of all U.S. electricity generation and more than 2 percent of worldwide electricity, stood by its previous lowered production expectations of 185 to 190 million tons in the United States and 20 to 23 million tons in Australia, with estimated total sales of 225 to 245 million tons.

Peabody’s president and chief commercial officer, Richard Navarre, was upbeat about Asia, saying the Pacific markets continue strengthening with record net coal imports flowing into China and low stockpiles in India.

Peabody said the U.S. market looks sketchy because of large inventories and little demand. Coal-fired power generation across the country is down more than 9 percent this year, the company said.

Few expected a good quarter for coal companies, with electricity demand lagging, a cool summer, a pullback by the steel industry, and plummeting natural gas prices.

Natural gas is a competing fuel for coal.

Over the first half of this year, Peabody earned $249.2 million, or 93 cents per share, on $2.8 billion in revenues. During the same period last year, the miner’s earnings of $290.3 million, or $1.06 per share, came on revenues of $2.79 billion.

Peabody’s 119.1 million tons of coal sold in the first six months of this year compared with 120.5 million tons a year ago.