Peabody Energy Offers Tepid Outlook

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Peabody Energy, the largest U.S. coal producer, said today that the worst flooding to hit Australia's Queensland state in several years will crimp production in the current quarter, forcing the Missouri-based company to lower its profit outlook for the period.

While Peabody (BTU) posted fourth-quarter results that handily beat Wall Street estimates, the company said it expects an adjusted first-quarter profit of 45 cents to 65 cents a share, far below the consensus estimate of 88 cents a share. Peabody is the lone U.S. coal producer with a major presence in Australia.

Heavy rains and floods forced Peabody to declare force majeure in Queensland last month, but the company said today that most of its mines in the region are close to returning to full production. The Wilkie Creek power station coal mine is operating at a reduced rate while the company is investigating alternative transport after being advised the West Moreton rail line may be cut for three months, according to Bloomberg News.

Australia is a leading producer of metallurgical coal, a key ingredient in the production of steel. Demand for metallurgical coal has surged in the past two years as Chinese and Indian steel producers have increased output.