Peabody Energy’s Revenue Improves as Coal Takes Global Market Share

Peabody Energy (NYSE: BTU  ) announced its second-quarter results before the opening bell this morning. The coal producer reported revenue of $1.76 billion and a loss from continuing operations of $72 million, or $0.28 per share. Revenue actually beat analysts' estimates by $120 million, while the company's net loss was in line with estimates.

Overall, second-quarter revenue was up 2% from last year's second quarter. A 1% increase in sales volumes when combined with higher pricing on Western coal was able to offset lower price realization in Australia to push revenue higher.

Peabody Energy's cost initiatives improved its operating results to largely offset a $155 million impact from lower seaborne coal prices. That resulted in adjusted EBITDA of $213.1 million. However, that is still $41.2 million less than the second quarter of last year. Further, Peabody Energy reported a loss from continuing operations of $72 million, which was quite the reversal from last year's operating profit of $101.4 million. The change was primarily the result of a $188.7 million tax provision differential due to a lower Australian tax benefit and higher U.S. earnings.

Despite the loss, Peabody Energy sees market conditions improving. The company noted that coal's market share of global energy consumption is now 30%, which is the highest it has been since the 1970s. Further, coal demand in the U.S. has been expanding for the past two years, while it sees seaborne market fundamentals improving as we head into 2015.

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