Sep. 23, 2014, 9:45 AM
- Peabody Energy (BTU +3.9%) opens higher after reporting higher expectations for Q3 EBITDA, now seeing a range of $190M-$210M, which BTU says reflects strong cost improvements and operating results.
- BTU says it is experiences higher than expected results from the western U.S., improved performance from Australian metallurgical coal mines and continued cost reductions across the platform.
- Also updates Q3 EPS targets to a loss of $0.63-$0.69 from prior expectations for a loss of $0.40-$0.53, primarily reflecting the effects of non-cash tax expense following the repeal of the Minerals Resource Rent Tax in Australia.
Sep. 22, 2014, 3:47 PM
- Cliffs Natural Resources (CLF -8.5%) plunges to 52-week lows as worries grow over the potential for an economic slowdown in China.
- Chinese steel production grew a mere 1% Y/Y in August, well off 2.6% YTD and 9%-10% growth recognized over the past few years; Wells Fargo's Sam Dubinsky views the data as negative for iron ore pricing, and thinks it means trouble for CLF, whose results could disappoint as the value of assets likely will diminish as pricing continues to fall.
- Also, a Bloomberg weekend report says coal demand in China may peak as soon as this year, which could further hurt coal miners such as CLF.
- Iron ore giants are lower: BHP -3.2%, RIO -2.7%, VALE -4.8%.
- Coal producers: ANR -9.7%, WLT -9.2%, ACI -7.7%, CLD -4.6%, BTU -4.4%, WLB -2.7%.
Sep. 18, 2014, 3:39 PM
- Peabody Energy (BTU -4.6%) bumps off big early losses after saying it expects higher revenues/ton from the Powder River Basin next year than 2014 realizations due to strong contracting strategies built on layering in sales at attractive price levels.
- In an update on coal fundamentals and BTU's positioning, CEO Greg Boyce cites a fundamental mismatch in early reporting regarding China's new coal quality policies relative to the emerging view of its likely beneficial effects on Australian high-quality coal exports.
- BTU shares had sunk to multi-year lows after Goldman Sachs downgraded shares to Sell.
Sep. 18, 2014, 11:26 AM
- More on Goldman Sachs' downgrade of Peabody Energy (BTU -5.3%): The firm thinks coal prices are not yet close to the bottom, and it sees metallurgical coal falling as low as $120/metric ton during Q4 - bad news for all coal miners, but especially so for BTU and Alpha Natural Resources (ANR -4.1%).
- Goldman says it is focusing on three themes into year-end 2014: Avoid met coal stocks including BTU and ANR, given their high leverage and low-to-negative free cash flow; own sum-of-the-parts winners, reiterating its Buy ratings on SunCoke (SXC +1.9%) and Consol Energy (CNX -2%); prefer stronger balance sheets including SXC and CNX over weaker ones such as BTU and ANR.
- ETF: KOL
Sep. 18, 2014, 10:21 AM| 8 Comments
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Aug. 20, 2014, 4:57 PM
- An advertisement from Peabody Energy (NYSE:BTU) promoting coal as an energy source is misleading in its use of the phrase “clean coal,” according to the U.K.'s regulator for advertising standards.
- Upholding a complaint from the World Wildlife Fund, the regulator says consumers were likely to interpret the advertisement as a claim that “clean coal” processes don’t produce carbon dioxide or other emissions, and the ad must be changed before it runs again.
- The agency rejects a complaint from the WWF that BTU’s statement that “energy poverty” is the biggest human and environmental crisis was misleading and unsubstantiated.
Aug. 5, 2014, 7:49 AM
- Peabody Energy (NYSE:BTU) raises its Q3 guidance after deciding to trim back its metallurgical coal production in Australia.
- BTU now expects an adjusted Q3 loss of $0.36-$0.49 a share, better than its earlier forecast of a $0.40-$0.53 loss, and says it is reducing met coal output by ~1.5M tons/year from its Burton Mine in Queensland, Australia, as production levels from the mine are "not sustainable in the current market environment."
- BTU also expects to trim production levels to ~1M tons/year, cutting its annual average cost estimate for Australia to the low $70/ton range, as it plans to use reduced equipment fleets to target lower-cost reserves.
Jul. 29, 2014, 10:33 AM
- Arch Coal (ACI +3.5%) moves higher after its Q2 earnings loss came in better than expected as operating costs per ton fell 7%.
- Q2 sales fell 7% Y/Y to $713.8M, missing analyst consensus, but operating costs per ton fell to $20.55 from $21.19.
- ACI lowers its FY 2014 sales volume targets, including cutting its thermal sales volumes forecast to 124M-130M tons from 124M-132M tons to reflect the effects of transportation bottlenecks and the impact of a fall in steel production.
- Other coal names also are higher: ANR +4.3%, ARLP +2.4%, PVA +1.9%, WLB +1.9%, BTU +1.4%, RNO +0.9%, WLT +0.8%, KOL +0.4%.
Jul. 25, 2014, 10:56 AM
Jul. 22, 2014, 10:59 AM
- Peabody Energy (BTU +1.5%) moves higher after reporting a Q2 loss that was in line with estimates and a ~2% rise in revenue, helped by an increase in shipments and prices at its mining operations in the western U.S.
- Q2 U.S. mining revenue rose 6.2% to $1.03B, while revenue per ton gained 1.1%, but revenue from Australian mining operations fell 5% to $744.8M, with revenue per ton down 15%.
- Issues downside EPS guidance for Q3, now seeing a loss of $0.40-$0.53 vs. analyst consensus expectations for a $0.18 loss.
- Nevertheless, BTU sees market conditions improving, noting that coal's market share of global energy consumption is now 30%, highest since the 1970s, U.S. coal demand has been expanding for the past two years, and seaborne market fundamentals are seen improving into 2015.
Jul. 22, 2014, 8:02 AM
Jul. 21, 2014, 5:30 PM
Jul. 16, 2014, 2:18 PM
- Unloved Alpha Natural Resources (ANR +6.4%), Arch Coal (ACI +1.9%) and Peabody Energy (BTU +2.4%) are popping today thanks to China’s strong GDP reading and CSX’s solid earnings, but FBR analyst Mitesh Thakkar is not optimistic about the coal stocks heading into earnings.
- FBR expects most of the earnings calls to be focused on the two major challenges for coal producers - weak met coal pricing and rail service limiting steam coal volume - over and above company-specific issues.
- The firm lowers its 2014 EBITDA estimates by an average of 12% for the group, and cuts stock price targets for Cloud Peak Energy (CLD +1.2%) and Walter Energy (WLT +5.2%) by a dollar each, preferring steam coal names and/or low-cost met coal assets with solid balance sheets.
Jul. 9, 2014, 5:34 PM
- Peabody Energy (BTU) says it is still in talks with Nathan Tinkler about the sale of its Wilkie Creek mine in Queensland state, following a report that the former Australian billionaire missed a payment for the asset.
- BTU is said to have granted an extension to Tinkler and his New York-based financiers, although it’s not clear for how long.
- BTU agreed in May to sell the mine to Tinkler's company for $70M and the assumption of liabilities including rail and port obligations, but a June 30 deadline for the payment was missed.
Jul. 7, 2014, 12:44 PM
- Coal stocks suffer a beating after Deutsche Bank downgrades Peabody Energy (BTU -3.3%) to Hold from Buy with a $19 price target, down from $23, to reflect lower realized coal prices (particularly metallurgical coal) and anticipated ongoing cost pressures in foreseeable future.
- Consol Energy (CNX -1.7%) is the firm’s only Buy-rated coal stock because of the company’s “fast-growing natural gas business and solid financial position.”
- Although the Deutsche team says its focus is shifting to more company specific stories from an emphasis on sector performance, other coal companies are sharply lower: ACI -4.3%, ANR -4.8%, YZC -1.3%, CLD -2.4%, WLT -3.6%, RNO -1.5%, WLB -2%.
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