One of the world's biggest coal producers and the largest coal producer in the US, Peabody Energy Corp, reported Tuesday a 66 percent drop in profit in Q2 from last year, as coal prices and demand sank.
Peabody's net income in Q2 of this year, ended June 30, 2009, reached $79.2 million for the second quarter, down from $233.3 million during the same quarter of last year.
The firm's Q2 revenue fell to $1.34 billion from $1.53 billion a year earlier, or by 12 percent. Analysts had expected revenue of $1.44 billion.
Over the first half of this year, Peabody earned $249.2 million, on $2.8 billion in revenues. During the same period last year, the miner's earnings of $290.3 million came on revenues of $2.79 billion.
The St. Louis-based firm sold 59.5 million tons of coal during the quarter, compared with 59.6 million tons during the same period last year. Moreover, 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.
The company attributed its drop in profits to the drop in global steel production-except for the still growing Chinese market-and a decline in energy consumption.
"Peabody continues to deliver positive earnings in the face of the worst global recession in generations," said Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce. "Emerging Asia holds the world's fastest-growing economies, and those economies are fueled by coal. Based on current trends in the Pacific markets, we expect to increase our Australia metallurgical and thermal coal sales in 2010, using existing capacity."
The company says that the US coal markets, however, will take a longer amount of time to rebound due to high inventories and low demand.
Based on decreased US generation and industrial use as well as reduced exports, Peabody rojects that demand for US coal in 2009 will be below 2008 levels by 115 million to 125 million tons.