Peabody cuts another 250 jobs, lowers Q2 earnings target
Peabody Energy is cutting 250 employee and contractor positions at its coal mines in Australia, as it lowers its earnings forecast for the second quarter amid a weak coal market.
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“These actions are aimed at increasing productivity, lowering costs and improving cash flows, while reducing metallurgical coal volumes for sales when markets improve,” the US miner said late on Tuesday June 30.
As many as 80 of these redundancies will be at its Metropolitan met coal mine in New South Wales, as the site transitions to a five-day production schedule over the next month, according to local media reports.
This is the second round of job cuts by the miner in the space of one month.
Earlier in June, Peabody cut 250 corporate and regional positions to “create a leaner organisation and lower costs”.
Peabody has also dropped its second-quarter targets due to weather-related shipment issues in the Southern Powder River Basin in the USA and lower seaborne coal prices.
Lower met coal prices are expected to negatively affect the company’s earnings in the second quarter by about $20 million, with “half related to spot coal sales during the quarter and half related to reduced coal inventory valuation due to benchmark third quarter settlements”, it said.
The third quarter hard coking coal benchmark was settled at $93 per tonne fob Australia, 15% lower than the June quarter contract price, while Steel First’s fob Australia premium hard coking coal index fell 10% during April-June to stand at $90.48 per tonne on June 30.
In the USA, production at the Southern Powder River Basin has been reduced by 5-5.5 million short tons on a series of substantial rain and flash flooding events primarily in June, Peabody said.
Although production levels have largely returned to normal, with shipments from the area deferred to the third and forth quarter, the miner expects to take $40-million hit on its June quarter financial results.