TORONTO (miningweekly.com) – US coal producer Peabody Energy earned less in the third quarter than the same period of last year, but the results the company reported on Tuesday were better than most analysts had been expecting.

Peabody, which mines coal in the US and Australia, reported net income of $106,8-million, or $0,40 a share, compared with $369,5-million, or $1,35 a share, in the third quarter of 2008.

Analysts had predicted earnings of about $0,24 a share, according to Bloomberg.

Third-quarter revenue fell to $1,67-billion from $1,89-billion in the same period last year, as a result of lower volumes.

However, the firm said coal prices, especially for metallurgical coal, are improving.

Peabody also raised its full-year financial targets, and now expects earnings before interest, tax, depreciation and amortisation (Ebitda) of between $1,2-billion and $1,3-billion for 2009, the company said on Tuesday, citing its “solid” third-quarter results.

It had previously forecast Ebitda of $1-billion to $1,2-billion.

The group sold 63,5-million tons of coal in the third quarter, compared with 65,6-million a year earlier, and has forecast full-year sales of between 235-million and 245-million tons.

In the US, the firm has reduced operations at its Powder River Basin mines, but sales from the company's Australian mines rose 30% compared with the second quarter.

“We are encouraged by today’s results, especially out of the company’s Australian operations,” Daniel Scott, an analyst at New York-based Dahlman Rose & Co, said in a note.

“The stronger earnings, as compared to our expectations, were a result of lower than expected cost per ton in western US operations, higher metallurgical coal volumes as a per cent of total Australian sales, and strong trading results.”

Peabody said that it has seen continued strengthening in the Pacific coal markets, led by demand for seaborne metallurgical and thermal coal from China and India.

“The forward curves also suggest strong price appreciation over the next several years,” the company said.

To date, Peabody has committed nearly 3,3-million tons of coal for China deliveries in 2009, including more than 1,7-million tons from its Australian operations.

The company's coal sales from Australia in 2009 are expected to be 21-million to 23-million tons, including between six-million and 6,5-million tons of metallurgical coal and 9,5-million to ten-million tons of thermal export coal.

In the US, coal markets “continue to await an economic and industrial recovery in electricity generation,” Peabody said.

The firm is targeting sales of about 190-million tons in the US this year and has maintained a heavily contracted position in the US, with 2010 planned production now essentially committed and priced.

“For 2010, growing demand in the Pacific is driving higher Australia sales projections of 24 to 27-million tons, or 15% above 2009's targets, with minimal capital required,” the company said.

In the US, Peabody is targeting 2010 volumes of 185-million to 195-million tons, in line with 2009's expectations and five-million to 15-million tons lower than 2008.

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