COAL FALLS FARTHER

Peabody Energy 2Q Pft Falls 66%, 09 Outlook Undercuts Views
Mark Long and Tess Stynes, July 21, 2009 (Dow Jones via Wall Street Journal)

"Peabody Energy Corp… said its second-quarter earnings fell 66% as global recession continued to crimp coal demand, and pegged its 2009 earnings below market forecasts.

"…[Peabody] and its peers over the past year have been hit hard by a drop in electricity demand and sharply lower steel production, though Peabody said Pacific markets are strengthening, with record net coal imports flowing into China and low stockpiles in India…[A]s a result of growth in Asia, it expects to increase sales at its Australian operations next year, though it maintained its output guidance for this year."

Coal use is down and New Energy use is up. (click to enlarge)

"In the U.S., meanwhile, the company said coal-fired power generation is down more than 9% this year, with stockpiles of coal reaching their highest in years before starting to be drawn down towards the end of June. U.S. coal demand fell to the lowest levels since 2002 in the first quarter, while production slid to mid-2005 levels, according to the Energy Information Administration."

Coal use is down and New Energy use is up. (click to enlarge)

"Peabody, one of the world's biggest coal producers, said… second-quarter U.S. coal output fell nearly 25 million tons year-over-year, but with stockpiles remaining high, 'demand growth or additional supply adjustments will be needed to balance the market.'

"…[Peabody] posted second-quarter profit of $79.2 million, or 29 cents a share, down from $233.3 million, or 85 cents a share, a year earlier. Revenue decreased 12% to $1.34 billion…Volume sold edged down by 100,000 tons to 59.5 million…"