Peabody Energy Corp. said Thursday that its first-quarter profit slipped on weaker U.S. coal demand for electricity generation because of a mild winter and utility switchovers to cheaper natural gas.
But its January-March earnings still beat Wall Street's expectations and its shares rose about 7 percent.
Peabody, the world's biggest private-sector coal company, said its net income attributable to common shareholders was $172.7 million, or 63 cents per share, over the first three months of this year, down from $176.6 million, or 65 cents, a year earlier. Revenue rose 17 percent to $2.04 billion from $1.74 billion the same period a year ago.
On average, analysts polled by FactSet expected St. Louis-based Peabody to earn 55 cents per share on revenue of $2.08 billion.
The company also forecast adjusted diluted earnings in the second quarter at 40 to 65 cents per share, reflecting lower pricing for coal used in steelmaking and electricity generation.
Peabody's revenue increase was helped by its Australia operation, which is a key supplier of metallurgical coal for steelmaking in booming Asian markets. Revenue in that segment jumped 48 percent, while U.S. revenue was up 5 percent.
"Our operations contributed higher revenues and margins per ton in all regions, demonstrating the strength of our diverse platform in the face of challenging conditions," said Gregory Boyce, Peabody's chairman and chief executive.
Peabody and other coal companies face challenges from slowing growth in China, the world's second-biggest economy and a huge importer of coal. But Boyce said China's steel production rebounded last month and the country's coal imports are at a record level.
He insisted that global industry and economic data still suggest the industry is in what he has called a "coal supercycle," with China, India and other emerging Asian countries likely to account for more than 90 percent of the increase in global coal demand over the next quarter century. Many of those countries will look to Australia to fill the need, Boyce said.
The U.S. market appears more unsettled, at least for now. The mild winter reduced demand for electricity and heating, helping to push down natural gas prices. A number of power plants are switching to gas from coal to generate power.
Some analysts believe that situation isn't likely to change dramatically unless there's a scorching summer that will stoke demand for electricity to run air conditioners in homes and businesses. The nation's natural gas supplies are at record levels, and demand would have to soar for gas prices to rise significantly.
On Thursday, Peabody _ which has mines in Illinois, Indiana, Wyoming, Arizona and New Mexico _ cut its expected U.S. sales volume to 185 million to 195 million tons from its previous forecast of 195 million to 205 million tons. Boyce said coal shipments fell last month after various slowdowns at mines, and "additional reductions are likely." Peabody let stand its forecast of selling 33 million to 36 million tons of its Australian coal, up from 25 million tons last year.
"Peabody is negotiating with select customers regarding reduced 2012 shipments and is lowering planned U.S. production," Boyce said.
Sterne, Agee analyst Michael Dudas said Peabody's first-quarter showing was "solid," adding in a research note that "we support reduction in U.S. shipments and are pleased to see Peabody maintain Australian shipment targets."
"Management put forth reasonable pricing expectations for its uncommitted coals and support for growth in seaborne coal shipments, which will include increased U.S. exports of met and thermal coals," Dudas wrote.
Peabody supplies enough coal to power 10 percent of the U.S. electrical grid and to price 2 percent of the world's electricity.
Peabody shares rose $1.94, or 6.8 percent, to $30.40 in afternoon trading.