US coal miner Peabody Energy
(NYSE:BTU), the world’s largest privately owned producer of the fossil fuel, reported on
Wednesday a fourth-quarter loss of $289.8 million, a notable reversal of
fortunes from a year ago, when it posted a profit.
For the year, the mining firm
reported a loss of $211.3 million, or $2.04 per share, swinging to a loss.
Revenue was reported as $4.62 billion.
The St. Louis-based company blamed converging issues, including a mild Northern winter, low natural gas prices, as well as trade and import policy uncertainties, for the bad performance.
Peabody was bleak on its outlook
for 2020, saying it expected further weakness in the market during the first
half of the year.
The world’s largest privately-owned coal producer expects further weakness in the market during the first half of the year.
“Peabody Energy is getting hammered
by weak coal industry fundamentals and escalating environmental, social and governance (ESG)
concerns,” Moody’s lead coal analyst, Benjamin Nelson, said in a note to
investors.
The coal miner is taking a “live
within our means” approach, which means adopting more conservative
financial policies, such as reducing capital spending, suspending dividend
and eliminating share repurchases.
For 2020, Peabody has earmarked
about $250 million for capital expenditure, 12% lower than last year’s actual
capex.
“While these actions will help
preserve cash and the company has good liquidity today, we expect EBITDA will
be down meaningfully and the company will be challenged to generate positive
free cash flow in 2020,” Nelson noted.
The company also inked a deal with activist investor Elliott Management, its largest shareholder, and will appoint several new members to the company’s board.
The announced new board members include Elliott Management ‘s equity partner Dave Miller, Elliott Management’s portfolio manager Samantha Algaze and coal industry executive Darren Yeates. Peabody said it would nominate each of the new directors, along with all current directors, for a full one-year term in May at the company’s upcoming annual meeting of shareholders.