Peabody's quarterly earnings up 151% as demand grows

Peabody's quarterly earnings up 151% as demand grows

Washington (Platts)--19Apr2006

Peabody Energy's first quarter net earnings were up 151% to $130.2 million
(48cts/diluted share) on revenue of $1.3 billion, compared with net income of
$51.9 million (19cts/share) on revenue of $1.1 billion in the year-ago
quarter, the company said Tuesday.

"Peabody is capturing higher prices on expanded volumes and delivering record
financial results amid growing global coal demand and very tight supplies,"
President and CEO Gregory Boyce said. "Our operations are positioned to
deliver even stronger second half performance, we have reached multi-year
agreements for significantly higher prices beginning in 2007, and we continue
to expand our production capacity to meet sustained demand growth."

Margins continued to expand in both the eastern and western US, the company
said. Increased per-ton revenues more than offset higher operating costs/ton
related to longwall mining equipment installation downtime at the Twentymile
and Harris mines, the planned idling of the Black Mesa mine in Arizona and
continuing rail transportation shortfalls in the Powder River Basin.

"The global market fundamentals for coal continue to strengthen," Boyce said.
"A number of US coal customers remain at record low stockpile levels, global
coal prices continue to increase, natural gas exits a very mild winter at
forward prices from $7 to $10/MMBtu, and world oil and gas production
struggles to keep pace with demand."

The company confirmed its full-year earnings estimate of $1.87 to $2.43/share
and productions targets of 230 million to 240 million short tons with sales of
255 million to 265 million st.

In the first quarter, Peabody sold 61.4 million st, including 13.7 million st
from eastern US operations, 39.8 million st from western US operations, 1.9
million st from Australian operations and 6.0 million st from trading and
brokerage operations. In Q1 2005, Peabody sold 59.1 million st, including 13.0
million st from the East, 36.7 million st from the West, 2.0 million st from
Australia and 5.4 million st from trading and brokerage.

Revenue/st averaged $17.69 in the US with eastern revenues of $37.47 and
western revenues of $10.66, compared with a Q1 2005 average of $16.06 with
eastern revenues of $32.72 and western revenues of $10.46, Peabody said.
Operating costs/st in the US averaged $12.83 with eastern costs of $27.82 and
western costs of $7.65, compared with a Q1 2005 average of $11.89 with eastern
costs of $25.42 and western costs of $7.34.

-- Mark E. Heckathorn, mark_heckathorn@platts.com

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