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Peabody Energy Corp.'s stock rises despite 4Q and full year 2009 earnings drop

by Katharine Lau
Jan 26, 2010


Peabody Energy Corp., the world’s largest coal mining company, posted lower fourth quarter and full year earnings for 2010 due primarily to large losses attributed to the company’s Venezuela holdings.

The St. Louis-based coal mining company, with southern Illinois operations at the Gateway, Wildcat Hill, and Willow Lake Underground mines, earned $92.2 million, or 34 cents per diluted share attributable to common stockholders, for the quarter ended Dec. 31.  This represents a 68.6 percent decline from the year-earlier quarter of $293.1 million, or $1.09 per diluted share attributable to common stockholders. The company handily beat analysts’ quarterly earnings estimates of 30 cents per diluted share, as compiled by Zacks Investment Research Inc.

Revenues totaled $1.55 billion for the fourth quarter, down 18 percent from $1.89 billion in the year-earlier quarter. 

At the company’s earnings teleconference Tuesday, Michael C. Crews, Peabody chief financial officer, said losses at the company’s Venezuelan mining operations were due to “significant operating issues coupled with the fact that costs were going up significantly because Venezuela is really in a hyperinflationary environment.” 

Peabody mines in Venezuela had been owned jointly with the government of President Hugo Chavez. But Crews said, “The most prudent thing for us to do would be to write off the remaining book value of that investment.”

At the teleconference analysts did not press company officials on the Venezuelan losses but did enquire about the company’s Mongolian mining ventures. In a January 12 analyst’s report, FBR Capital Markets Corp. analyst David Khani said: “We believe the company’s investment possibility in the Mongolian Tavan Tolgoi project could be worth an additional $4.60 per share. We reiterate Peabody as an FBR Top Pick.” 

For all of 2009, net income attributable to common shareholders was $448 million, or $1.66 per diluted share, a 52 percent drop from $953 million, or $3.50 per diluted share, posted for all of  2008. Total sales in the year ended Dec. 31 declined slightly to $6.01 billion from $6.56 billion. 

Peabody shares closed Tuesday at $46.13, up 70 cents or 1.54 percent from Monday’s closing price of $45.43.