Peabody Cuts Q2 Guidance

(RTTNews) - Coal producer Peabody Energy (BTU) on Tuesday said it expects second-quarter adjusted EPS and adjusted EBITDA to to be below the original targeted range due to weather-related shipment issues in the Southern Powder River Basin and lower seaborne coal pricing.

In April, Peabody had initially forecast second-quarter adjusted loss of $0.59 to $0.49 per share and adjusted EBITDA of $135 million to $175 million.

Analysts polled by Thomson Reuters currently expect the company to report a loss of $0.48 per share for the second quarter.

In a statement Tuesday, Peabody said it 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 up to 5.5 million tons.

The company was also impacted by about $20 million from the effects of lower pricing on Australian metallurgical coal, with approximately half related to spot coal sales during the quarter and half related to reduced coal inventory valuation due to benchmark third quarter settlements.

Regarding other factors expected to affect second quarter results, in early June Peabody announced a reduction of about 250 positions, with expected annual savings of $40 to $45 million when fully implemented later this year.

Also, the company has initiated actions to reduce about 250 employee and contractor positions at multiple metallurgical and thermal coal mines in Australia.

Peabody expects to incur an estimated $20 million to $25 million in second quarter 2015 charges related to these activities, and these charges were not included in the company's previous financial targets.