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Peabody’s Coal Sales Volume And FY2021 Outlook

Piles Of Coal. Image source: Flickr Image.

Coal may be dying due to the pollution that it causes and the shift of the world’s energy usage toward renewable energy.

But coal stocks are definitely not dying and are coming back, and probably at a much stronger cycle than the prior one.

Look at the stock price of Peabody Energy (NYSE:BTU), one of the biggest coal miners in the U.S. in the snapshot below.

BTU historical stock price

BTU historical stock price. Source: StockCharts.com

It has been shooting through the roof lately and reached as much as $11 USD per share as of Aug 2021.

BTU has rallied by more than 1000% in a matter of only 52 weeks, going from a penny stock to as much as $11 USD per share now.

BTU’s rally in the last 52 weeks has put some of the growth stocks such as Tesla to shame.

So what has been going on?

In this article, we are going to examine Peabody Energy’s coal shipment volumes and the guided FY2021 outlook.

Let’s get down to work.

Peabody’s U.S. Thermal Coal Shipment Volumes By Year

Peabody's U.S. thermal coal shipment volumes by year

Peabody’s U.S. thermal coal shipment volumes by year

* Peabody’s coal shipment volumes in the U.S. were extracted from the company’s earnings releases.
* Peabody’s coal shipment volumes FY2021 outlook was provided by the company and obtained from the respective earnings releases.
* Peabody’s fiscal year begins on Jan 1 and ends on Dec 31.

Let’s first look at Peabody’s U.S. coal shipment volumes by year as shown in the chart above.

For your information, Peabody’s biggest coal shipment volumes come from the U.S. in the Powder River Basin located between Montana and Wyoming.

The majority of the coal extracted from the Powder River Basin region is of the thermal type which is usually used for electricity generation purposes.

All told, Peabody’s U.S. thermal coal shipment volumes reached 105.5 million tons as of fiscal 2020 and are projected to decline slightly to 104 million tons in fiscal 2021, according to the company.

Over the last 5 years, Peabody’s U.S. thermal coal shipment volumes have been on a decline and the FY2020 figure was the lowest the company has ever reported.

The worst coal volume sold in FY2020 was primarily driven by the COVID-19 outbreak which has considerably slowed down energy consumption and therefore, coal consumption.

Additionally, Peabody’s U.S. coal shipment volumes declined the most in FY2020 at more than 20% compared to other fiscal years.

However, the company guided that the U.S. coal shipment volume decline will reverse in fiscal 2021 as reflected by the flat shipment volume of 104 million tons.

Peabody’s Seaborne Coal Shipment Volumes By Year

Peabody's seaborne coal shipment volumes by year

Peabody’s seaborne coal shipment volumes by year

* Peabody’s seaborne coal shipment volumes were extracted from the company’s earnings releases.
* Peabody’s seaborne coal shipment volumes FY2021 outlook was provided by the company and obtained from the respective earnings releases.
* Peabody’s fiscal year begins on Jan 1 and ends on Dec 31.

Seaborne coal shipment volumes represent overseas mining operations such as that in Australia.

Peabody’s biggest overseas mining operation is located in Wilpinjong, New South Wales, Australia, an area of the size of 5,500 football fields.

According to the chart above, Peabody’s seaborne mining operations are divided into 2 segments, namely thermal and metallurgical.

Metallurgical coal is used for steel making and therefore, is primarily sold to steel-making companies whereas thermal coal is sold primarily to utility companies for electricity generation purposes.

That said, according to the chart, both Peabody’s seaborne thermal and met coal mining operations have been on a decline over the last 5 years.

As of fiscal 2020, Peabody’s seaborne metallurgical coal shipment volumes have declined the most and reached only 5.6 million tons, half of what the company sold in FY2017.

Going forward, Peabody guided for 4.8 million tons of seaborne metallurgical coal shipment volumes in FY2021.

On the other hand, Peabody’s seaborne thermal coal shipment volumes are not as bad as that of metallurgical coal.

Over the last 5 years, Peabody’s seaborne thermal coal shipment volumes have remained relatively flat at 19 million tons but the company has guided for a much lower number for FY2021 at only 17.5 million tons.

Peabody’s U.S. Thermal Coal Shipment Volumes (Quarterly)

Peabody's U.S. thermal coal shipment volumes by quarter

Peabody’s U.S. thermal coal shipment volumes by quarter

* Peabody’s quarterly U.S. thermal coal shipment volumes were extracted from the company’s earnings releases.
* Peabody’s fiscal year begins on Jan 1 and ends on Dec 31.

On a quarterly basis, Peabody’s U.S. thermal coal shipment has remained flat in fiscal 2020 and has slightly declined in the last 3 years since fiscal 2019.

In fiscal 2021 2Q alone, Peabody shipped 26.4 million tons of thermal coal in the U.S., representing a year-on-year growth rate of more than 20%.

Peabody’s 2nd quarter result is significant as it represents a year-over-year increase in thermal coal shipment in the U.S. for the 1st time in the last 3 years.

Peabody’s U.S. Thermal Coal Shipment Volumes (TTM)

Peabody's TTM U.S. thermal coal shipment volumes

Peabody’s TTM U.S. thermal coal shipment volumes

* Peabody’s TTM U.S. thermal coal shipment volumes were extracted from the company’s earnings releases and is based on the sum of the quarterly results on a trailing 12-month or 4-quarter basis.
* Peabody’s fiscal year begins on Jan 1 and ends on Dec 31.

The TTM plot above clearly demonstrates the decline of Peabody’s U.S. thermal coal shipment volume in the last 3 years.

However, the 2nd quarter result shows that the U.S. thermal coal shipment volume has reversed the decline and tick significantly higher compared to the prior quarter.

Year over year, the 2nd quarter result was still in a decline at more than 10%.

Peabody’s Seaborne Coal Shipment Volumes (Quarterly)

Peabody's seaborne coal shipment volumes by quarter

Peabody’s seaborne coal shipment volumes by quarter

* Peabody’s quarterly seaborne coal shipment volumes were extracted from the company’s earnings releases.
* Peabody’s fiscal year begins on Jan 1 and ends on Dec 31.

In terms of seaborne coal shipment volumes, Peabody shipped 4.1 million tons and 1.4 million tons of thermal coal and met coal, respectively, in 2Q 2021.

While seaborne thermal coal was on a decline on a year-on-year basis, metallurgical coal shipment volume rose nearly 30% in Q2 2021.

On a long-term basis, thermal coal shipment volume has remained flat while met coal shipment volume has slightly declined between 2019 and 2021.

Peabody’s Seaborne Coal Shipment Volumes (TTM)

Peabody's TTM seaborne coal shipment volumes

Peabody’s TTM seaborne coal shipment volumes

* Peabody’s TTM seaborne coal shipment volumes were extracted from the company’s earnings releases and is based on the sum of the quarterly results on a trailing 12-month or 4-quarter basis.
* Peabody’s fiscal year begins on Jan 1 and ends on Dec 31.

On a TTM basis, Peabody sold only 18 million tons of seaborne thermal coal as of 2Q 2021, a record low for the company in the last 3 years.

On the flipped side, Peabody’s seaborne metallurgical coal shipment has risen significantly in fiscal 2Q 2021 compared to the prior quarter to 4.9 million tons on a TTM basis.

While seaborne thermal coal has continued to decline in terms of volume sold, seaborne met coal has managed to tick higher in the latest quarter, suggesting that a turnaround might be on the horizon.

Conclusion

In short, Peabody’s both the U.S. and seaborne coal shipment volumes have been on a decline in the last 3 years, with 2020 being the worst hit when the year-over-year growth rate was the worst.

While the pandemic disruption may have significantly subsided in fiscal 2021, Peabody has guided for lower coal shipment volumes going into fiscal 2021 for both the U.S. thermal and seaborne coal shipment.

By the end of FY2021, Peabody expects to sell only 104 million tons of U.S. thermal coal on average, a relatively flat figure compared to the prior year.

On the other hand, the seaborne thermal coal shipment volume is expected to be much lower at only 17.5 million tons by the end of fiscal 2021.

Similarly, Peabody also has guided lower the seaborne met coal shipment volume to only 4.8 million tons on average, a year-on-year decline of 14%.

All in all, Peabody will ship significantly less coal in FY2021.

Therefore, BTU’s stock rally seems to be disconnected from the coal shipment volumes as they have been going downhill.

Let’s check out some other coal metrics discussed in other articles.

References and Credits

1. All financial figures in this article were obtained and referenced from Peabody’s quarterly and annual reports available in Peabody Investor Center.

2. Featured images in this article are used under creative commons license and sourced from the following websites: burning coals and Piles of Coal.

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Disclosure

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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