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Peabody difficulties continuing

Peabody Energy

Peabody Energy (NYSE: BTU) overnight announced its first-quarter 2020 operating results. The company highlighted a downturn in revenues to USD $846.2 million compared to USD $1.25 Billion in the previous year. It also announced a loss from continuing operations, net of income taxes of $129.3 million; net loss attributable to common stockholders of $129.7 million; diluted loss per share from continuing operations of $1.31; and Adjusted EBITDA1 of $36.8 million. Despite the challenging result, the company said it will continue to uphold safety across its operations particularly in response to COVID-19.

The company highlighted in a statement that as a component of Peabody’s commitment to the ongoing health and safety of our employees, vendors, and communities, Peabody Energy is following advice from government authorities and taking precautions to manage the spread of COVID-19.

It said Peabody operations have implemented rigorous protocols, controls, and prevention measures, including mandatory temperature and health screenings; paid COVID-19 leave based on established guidance; enhanced cleaning and sterilization practices; expanded use of personal protective equipment; remote work where possible; and social distancing.  While the company’s operations have been designated as essential, each operation will only continue to operate when it safe and economic to do so.

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Peabody President and Chief Executive Officer Glenn Kellow said “During this time of great global concern and economic uncertainty, we are continually working to safeguard our people, communities and business as we pursue actions to confront near-term headwinds and best position our company for the future”

“In recent months, we have taken aggressive actions to improve our cost structure, and are now expediting a detailed mine-by-mine analysis to structurally improve our operating portfolio with accountability for performance targets extending from individual sites to the board level.  Our Peabody people will drive our success, and I continue to be impressed and grateful for their ability to quickly adapt to change and confront challenges head-on.”

Peabody’s North Goonyella holding costs still smouldering

Peabody is still reportedly seeking buyers for the troubled North Goonyella mine which currently sits on 82 million tons of coking coal. However, it continues to reduce holding costs at the troubled site.

In April, Peabody successfully entered into commercial agreements to reduce rail and port commitments for the North Goonyella asset beginning mid-year 2020, while maintaining sufficient rail and port capacity for when the mine resumes operation. 

As a result, holding costs have been reduced by approximately 85 per cent to $5 million per quarter, beginning in the third quarter of 2020.  

The company said it continues to closely monitor market conditions and the status of the commercial process to determine any incremental spending related to ventilation and re-entry of Zone B. 

1 Adjusted EBITDA, Free Cash Flow and Net Debt are non-GAAP financial measures.  Revenues per ton, costs per ton, Adjusted EBITDA margin per ton and per cent are non-GAAP operating/statistical measures.  The adjusted EBITDA margin is equal to segment Adjusted EBITDA divided by segment revenues. 

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AMSJ Nov 2021