Mine Street and Main Street Performances in the time of Downturn

Currently the quite a few export markets specially raw materials and long segments are showing a kind of very strange and rapid growth. Some products added more than USD 100 just in the couple of last days.The market looks like a ball that felt down on the ground and start to jump…but is seams that each following jump will be smaller than previous one.Coal mining giant, Peabody Energy Corporation has posted a more than tenfold increase in third quarter profit on a 59% YoY increase in revenues driven by strong volumes and higher pricing. It also raised its financial forecast for the fiscal 2008.

Peabody Energy earned USD 369.6 million for the third quarter, up from USD 32.3 million in the last year period. Income from continuing operations was USD 377.1 million, higher than USD 55 million per share in the comparable prior year quarter. EBITDA for the quarter was USD 609.8 million, up by 190% YoY from USD 210 million in the prior year.

Third quarter revenues were USD 1.91 billion, up by 59% YoY from USD 1.20 billion. Ten Wall Street analysts expected revenues of USD 1.68 billion. Peabody sold a volume of 66 million tonnes of coal in the latest quarter, up by 6% YoY from 62.1 million tonnes a year ago.

Coal companies have benefited from rising North American coal prices over the past several quarters, benefiting from increasing global demand and supply disruptions. Revenue from the company's US mining operations rose to USD 930.7 million from USD 805.5 million in the prior year quarter. Australian revenue soared to USD 789 million from USD 307.6 million a year ago. EBITDA from mining operations nearly tripled, and Trading and Brokerage increased 168%. Meanwhile, operating profit rose 324% to USD 490.2 million.

For the January to September 2008 period, Peabody reported net income of USD 660.2 million as compared to USD 228.5 million. Revenues increased to USD 4.71 billion from USD 3.38 billion in the prior year period.

Looking forward, for the fiscal year 2008, it raised its earnings from continuing operations guidance to a range of USD 3 to USD 3.25 per share from earlier estimated range of USD 2.50 to USD 3 per share. Seventeen Street analysts expect earnings of USD 2.86 per share. The current guidance range of USD 3 to USD 3.25 per share represents an increase of as much as 103% from 2007.

Peabody now expects 2008 EBITDA in a range of USD 1.75 billion and USD 1.85 billion, as much as 92% higher than 2007. Earlier, it expected full year EBITDA in the range of USD 1.6 billion to USD 1.8 billion.

Mr Richard Navarre president & chief commercial officer of Peabody said that "While there is uncertainty in today's economy, any easing of demand growth is likely to be offset by diminished global coal supply. Supply challenges around the world and lack of capital to respond to market shortages will continue to drive a tight global supply demand balance for coal. In addition, we believe that the long term coal demand profile is very strong and will continue to be led by emerging economies."

Peabody noted that, currently, approximately 300 gigawatts of new coal fueled generation is under construction around the world and expected to come on line over the next several years, requiring up to 1 billion tons of annual coal supply.

It added it has 10 million to 20 million tons of US production un priced for 2009, and 75 million to 85 million tonnes for 2010. Peabody said it has 6 million to 7 million tonnes of Australian based metallurgical coal available to be priced for the last three quarters of 2009 and 10 million to 11 million tonnes for 2010. Un priced Australian thermal coal volumes include 6 million to 7 million tonnes for the last three quarters of 2009 and 12 million to 13 million tons for 2010.