Peabody Energy Corporation (NYSE:BTU) CFO to Vacate Office Amidst Uncertainty
News that Chief financial officer, Michael Crews is to leave Peabody Energy Corporation (NYSE:BTU) at the end of July did not go well with Street seen by the stock plunging by double digits. The stock has been hit by a series of negative news in the recent trading sessions with the major one being the warning that lowers earnings and EBITDA should be expected in the second quarter.
Pessimism over Q2
Peabody Energy Corporation (NYSE:BTU) has posted six consecutive quarters of net losses as it continues to face shrinking demand as the Chinese steel industry continues to shrink.
However, the stock picked itself on Friday trading session waiting to see if the momentum will hold, going forward. A point of concern is the fact that the company has already cut its production expectations by 5 million to 5.5 million tons for June. Peabody Energy Corporation (NYSE:BTU) also expects to incur a charge of $40 million related to heavy raised flash flooding.
Earnings in the second quarter should drop by $20 million as the effects of lower pricing on Metallurgical coal become clear. Plans are already in place to cut about 250 employee and contractor positions at the coal mines in Australia as Peabody tries to boost productivity by lowering costs and improving cash flow.
Stock Downgrade
Peabody Energy Corporation (NYSE:BTU) has lost more than $1.8 billion since 2012 prompting a wave of cost cuts expected to save the company between $40 million and $45 million annually. A poor showing in the industry and on the earnings front has seen the stock downgraded by analysts at Deutsche Bank from a ‘hold’ to a ‘sell’.
Excess supply marred with decelerating demand is some of the challenges that the analysts expect upstream miners to face this year. Fears have already seen the likes of Peabody Energy Corporation (NYSE:BTU) resort to cost cuts while also trying to monetize non-core assets in an effort of shoring up the balance sheet.
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