Reuters: Global Markets: Peabody Energy expects earnings to hit a trough in 1st qtr

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Peabody Energy expects earnings to hit a trough in 1st qtr Dec 14th 2012, 14:34 Fri Dec 14, 2012 9:34am EST (Reuters) - Coal miner Peabody Energy Corp (BTU.N) said it expects earnings to hit a trough in the first quarter of the next year due to lower sales and prices. Weak Chinese demand and escalating operating costs and new taxes in Australia have hit Peabody, which has been struggling in the United States as power companies replace thermal coal with cheaper natural gas. U.S. sales would decline by about 2 million tons, while prices would fall 5 percent as higher-priced contracts expire. Peabody's growth outside the United States has largely come from Australia, where it took over Macarthur Coal a year ago. It has, however, put Australian expansion plans on hold, given weak coal markets. Australian unit costs would rise by about 10 percent on start-up expenses associated with the transition to owner-operator status at Peabody's Wilpinjong mine in New South Wales and the Millennium mine in Queensland, the company said. Peabody said costs, as wells as production, would also be hurt by the timing of additional overburden removal at the Eaglefield mine in Queensland and the Wilpinjong mine. The company, however, expects quarter-over-quarter improvement for the rest of 2013, driven by increased U.S. gas-to-coal switching as natural gas prices rise, and a pickup in global seaborne coal markets. Peabody shares, which have lost about 18 percent of their value this year, were down 1.5 percent at $27.18 early on the New York Stock Exchange on Friday morning. (Reporting by Swetha Gopinath in Bangalore; Editing by Joyjeet Das) Link this Share this Digg this Email Reprints

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