Peabody Energy 4Q earnings plunge 69 percent on lower demand for electricity and steel

Peabody Energy 4Q earnings plunge 69 percent

NEW YORK — Peabody Energy Corp. said Tuesday lower demand for coal from utilities and steelmakers drove its fourth-quarter earnings down 69 percent.

But the company, one of the world’s largest coal producers, said Asian demand is rebounding and it expects to approximately double capital expenditures to $650 million this year to expand production.

Peabody, based in St. Louis, earned $92.2 million, or 34 cents per share, in the last three months of 2009, compared with $293.1 million, or $1.09 per share, a year earlier.

Adjusted to exclude one-items, the company said it earned 43 cents per share in the most recent quarter.

Revenue fell to $1.55 billion from $1.89 billion a year earlier.

Thomson Reuters says analysts were expecting a lower adjusted profit of 29 cents per share on lower revenue of $1.47 billion. The estimates typically exclude one-time items.

Peabody shares rose 70 cents, or 1.5 percent, to $46.13.

Peabody says demand is improving in key markets including China and India, driving prices higher. Foreign steelmakers, for instance, have pushed the price of metallurgical-grade coal used in steel production as high as $200 on the spot market. Peabody says such contracts settled at $129 a ton for 2009.

This year, the company is expecting steel production to rise 9 percent.

“The economic growth is returning to pre-recession levels in the Asia-Pacific markets led by China,” President Richard Navarre told analysts during a conference call. “China’s power demand grew 21 percent in the fourth quarter alone.”

Peabody sees the U.S. market recovering more slowly as electric utilities work down swollen inventories.

“If we have average weather going forward, we now believe stockpiles are on pace to return to normal by the end of the year,” Navarre said. “Nevertheless, the U.S. recovery will not happen overnight.”

For 2010, Peabody is targeting total sales of 240 to 260 million tons versus 243.6 million tons in 2009.

Peabody produces enough coal to fuel 10 percent of all U.S. electricity and 2 percent of worldwide electricity.

AP Business Writer Tim Huber in Charleston, W.Va., contributed to this report.