Weak Chinese Demand Leads to Plunge in Peabody Energy Corporation (NYSE:BTU)’s Revenues

The revenues of Peabody Energy Corporation (NYSE:BTU) have been badly affected by weak Chinese demand. As per the reports, Peabody’s revenues have hit a 5.5% drop due in the first quarter of 2015 and the primary reason behind it is ever decreasing prices in the Chinese market. It is one of the prominent coal manufacturer and distributor in U.S. On the basis of these results, the company has also lowered its outlook for the rest of the year noting tight competition from players offering cheaper natural gas.

Why is momentum shifting in BTU?  Read this analyst breakdown.

Road So Far:

It could manage to earn as much as $1.54 billion revenues during the first quarter of 2015 as compared to $1.63 billion in the first quarter of the previous year. The information was revealed by Peabody to its investors recently. It executed a few transactions to cut down cost; hence, managed to offset nearly $100 million in the lower pricing in the previous quarter.

The senior management of the company hopes to witness a better performance in the coming months. According to Glenn Kellow, CEO-elect & President, Peabody, the financial performance of Peabody in the first quarter is a clear evidence of underlying strength of its business acumen. Even though, there is a huge competition going on in the market, which has led to a reduction in demand, as well as prices, but still Peabody has managed to perform nearly at par.

As soon as the results were announced, the prices of its stocks came down to $4.59, 5.75% down from the previous day’s close.

The manufacturing sector in China has been going through a rough phase currently, which has prompted the country to reduce its coal imports from U.S. Due to this sudden reduction in demand, a lot of coal manufacturers have faced loss in the recent quarter. Management of Peabody is hopeful that the market conditions will improve in the near future.

Culver Stinson

Culver Stinson

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.