Peabody’s latest results show the grim state of the company as it sheds a significant component of its workforce in order to preserve cash amidst continuing global uncertainty.
The company’s second-quarter 2020 operating results included revenues of $626.7 million; loss from continuing operations, net of income taxes of $1.55 billion; net loss attributable to common stockholders of $1.54 billion; diluted loss per share from continuing operations of $15.76; and Adjusted EBITDA of $23.4 million.
AMR understands that some major shareholders are furious with the company’s past conduct including the handling of the North Goonyella Mine fire which saw it shut the North Goonyella operation and place it on the market after unsuccessful efforts to recover the mine.
Shareholder are reportedly gathering evidence for a class action against the company in the wake of failures to disclose conditions to the market prior to the collapse of North Goonyella. Several high profile witnesses have reportedly been gathered as part of the action.
Yesterday, President and Chief Executive Glenn Kellow told shareholders “Over the past quarter, we have remained committed to the health and safety of our employees and communities in which we operate, while also taking further action to improve our cost structure”
“Our U.S. thermal operations have done a tremendous job of adapting to significantly lower demand, while our seaborne operations have remained pressured by the economic impacts of the COVID-19 pandemic. Continued uncertainty in global markets requires us to further improve our operating performance and ensure we have a scalable structure that can respond to market conditions in the months ahead.” According to the market release, the company is continuing to advance its program to reposition the cost structure of the corporate functions and mines to counter the impacts of reduced demand and low pricing.
“These initiatives include temporarily idling production at some mines; adjusting shift schedules to match demand; reducing the number of units in operation; offloading take-or-pay commitments; and eliminating additional positions, among other items.”
Peabody said its’ major activities include:
- Since April, the company reduced an additional 450 positions, including contractors, across several mines, bringing total reductions across the operations and corporate and support functions to approximately 1,020 positions. Over the past 18 months, Peabody has reduced its workforce by approximately 24 per cent.
- At Metropolitan Coal Mine, Peabody reduced approximately 34 per cent of its workforce, including contractors, and scaled back production in response to weak seaborne demand.
- The company restructured the Coppabella and Moorvale mines to operate as a single mining complex, which is anticipated to result in increased efficiencies and lower costs. In addition, the mine reduced three excavators/truck and shovel units in response to challenging PCI demand.
- In addition, Peabody furloughed approximately 280 positions, including contractors, at its Wambo Underground Coal Mine beginning in mid-June (at the conclusion of its recent longwall move) for 59 days. The company also furloughed employees during at an extended longwall move at Twentymile and shortened work schedules at several other U.S. thermal coal mines.
- Peabody reduced holding costs at North Goonyella to approximately $5 million per quarter, beginning in the third quarter of 2020.
- While work is still underway, since initiation of the program, 10 out of 17 currently owned and operated mines have demonstrated improvements in cost per ton when comparing second quarter 2020 results to full-year 2019 results, despite significant volume declines.
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