Peabody Energy Corporation · NYSE:BTU
Peabody Energy — 2008 FBR Capital Markets Fall Investor Conference
21 slides from Peabody Energy's conference presentation, Dec 3, 2008
Slide 1: Peabody Energy 2008 FBR Capital Markets Fall Investor Conference
Peabody Energy 2008 FBR Capital Markets Fall Investor Conference December 3, 2008
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Some of the following information contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, and is intended to come within the safe-harbor protection
Slide 3: BTU: The Only Global Pure-Play Coal Investment
BTU: The Only Global Pure-Play Coal Investment Unique Industry Near- and long-term global coal supply/ demand balance remains tight Coal markets stronger than other commodities Baseload nature of coal buffers industry from economic slowdown Supplies showing recent signs of cutbacks BTU: Positioned t
Slide 4: Macro Trends: Economy Eases Demand; Credit Challenges Supplies
China growing at ~8%, India 6 - 7%, other Asian countries 4 - 5%; Coal fueling electricity growth Coal consumption stable to soft amid weak U.S. economy Lower rates extend economic reach of Australian and U.S. coals; Long-term PRB-to-Asia opportunity Export demand to counter impacts of softer U.S. e
Slide 5: Multiplier Effect: Fast Growth Nations Have High Energy Intensity and Strong Coal Use
Multiplier Effect: Fast Growth Nations Have High Energy Intensity and Strong Coal Use China: 8% GDP = 11% Electricity Generation Growth Source: Peabody analysis based on 2009 GDP estimates.
Slide 6: New Coal Plants to Grow Global Coal Consumption by 2+ Billion Tons
New Coal Plants to Grow Global Coal Consumption by 2+ Billion Tons More Than 660 GW Planned or Under Construction Source: National Coal Council, The Urgency of Sustainable Coal, May 2008. China India Other Asia Europe USA Rest of World 37 20 15 10 8 10 China India Other Asia Europe USA Rest of World
Slide 7: China and India Drive Structural Shift in Seaborne Markets
China and India Drive Structural Shift in Seaborne Markets Stockpiles reflect mild weather and lack of exports 2008 export licenses lower than expected and below last year Taxes raised to discourage exports 40% coke (from 25%) 10% met coal (from 5%) 10% thermal coal (previously none) India Source: I
Slide 8: Operating Challenges and Growing Credit Concerns Strain Global Supplies
Operating Challenges and Growing Credit Concerns Strain Global Supplies Source: Industry reports. Key exporting countries falling short of targets Nations with two-thirds of exports unable to raise 2008 output Multiple Appalachian producers lower production targets in September/October Australian pr
Slide 9: Top Coal Exporting Nations Not Keeping Pace With Demand
Top Coal Exporting Nations Not Keeping Pace With Demand Source: Barlow Jonker, industry reports, Peabody analysis. Venezuela Poland Kazakhstan Canada Vietnam China U.S. Colombia South Africa Russia Indonesia Australia 2002 - 2004 7 10 24 25 29 50 51 65 68 98 161 251 Indonesia S. Africa Russia Colomb
Slide 10: The "Coal Standard"? Coal Prices Show Strength Against Other Commodities
The "Coal Standard"? Coal Prices Show Strength Against Other Commodities Safe Haven: 1-Year Coal Prices Up; Other Commodities Down Source: Coal prices LTM as of Nov. 19, 2008 based on published index prices (PRB, Colorado and Illinois Basin 1-year forward delivery, Newcastle prompt delivery). Oil, c
Slide 11: BTU: The Only Global Pure-Play Coal Investment
BTU: The Only Global Pure-Play Coal Investment Unique Industry Near- and long-term global coal supply/ demand balance remains tight Coal markets stronger than other commodities Baseload nature of coal buffers industry from economic slowdown Supplies showing recent signs of cutbacks Unique Company Wo
Slide 12: BTU Advantage: Global Platform Offers Growing and Diverse Earnings
BTU Advantage: Global Platform Offers Growing and Diverse Earnings 1st Qtr 2nd Qtr 1 99 2003 2003 and 2007 reflect actual results from continuing operations. 2008 share estimated. International EBITDA Share Grows to 50% in 2008 1st Qtr 2nd Qtr 50 50 2008 United States International 1st Qtr 2nd Qtr 2
Slide 13: BTU Advantage: Growing Australia Export Volumes of High Quality Met and Thermal
2008 2009 2010 Previously Priced 6 2.5 1 Recently Priced 2.5 1.5 0 Unpriced 6 12 BTU Advantage: Growing Australia Export Volumes of High Quality Met and Thermal Previously Priced Recently Priced Recently Priced Unpriced Unpriced Peabody's Growing Thermal Coal Position 9.5 - 10.5 13 - 14 Short Tons i
Slide 14: U.S. Net Exports Grow to 50-60 Million Tons; Benefits Illinois Basin and PRB
2006 2007 2008 2009 Export 49300 59300 85000 90000 Import 36000 36400 31000 29000 U.S. Net Exports Grow to 50 - 60 Million Tons; Benefits Illinois Basin and PRB U.S. net exports growing ~40 million tons between 2007 and 2009 Peabody YTD transactions: 7 million tons of term U.S. exports through 2011
Slide 15: BTU Advantage: Strong Contracting Discipline; U.S. 90+% Priced For 2009
BTU Advantage: Strong Contracting Discipline; U.S. 90+% Priced For 2009 PRB moving as slack taken out of other markets; consumption up >3% YTD Third quarter premium PRB priced commitments 49% above 2007 realized prices Reduced 2009 PRB growth plans by 5 million tons PRB to supply ~40 - 45% of new pl
Slide 16: BTU Advantage: Number-One Producer in Very Tight Illinois Basin Market
BTU Advantage: Number-One Producer in Very Tight Illinois Basin Market Low inventories YTD Illinois Basin prices more than double Benchmarks move from $30s to $60s - $70s Traded prices less impacted with fewer financial players Peabody: 32 MTPA of Illinois Basin production 3.7 billion tons of reserv
Slide 17: Cost Containment Actions Enable Margin Expansion
Cost Containment Actions Enable Margin Expansion Process Improvement Projects New Mine Efficiencies Newer surface mines (Wilpinjong, El Segundo) lower cost than existing mines Major Cost and Productivity Initiatives Safety U.S. record 1.74 rate YTD Commodity Management Use of consumption teams Hedgi
Slide 18: Peabody: A Leader in Btu Conversion and Clean Coal Solutions
Peabody: A Leader in Btu Conversion and Clean Coal Solutions Only non-Chinese equity partner in GreenGen, China's centerpiece coal / climate initiative Partnering with ConocoPhillips on new coal- to-natural gas facility in Kentucky Investing in GreatPoint Energy to develop coal-to-gas plants * Inner
Slide 19: BTU: Ongoing Track Record of Financial Performance
Revenue 40% EBITDA 86% Operating Profit 128% EPS 188% Cash Flow 48% BTU: Ongoing Track Record of Financial Performance YTD Performance Sets Records in All Financial Metrics Record Third Quarter; Full Year EBITDA and EPS Targets Raised; Share Repurchase Program Doubled to $1 Billion Dollars in millio
Slide 20: BTU's Approach: Making Good Money in All Market Conditions
2003 2004 2005 2006 2007 2008 EBITDA 422 496 709 909 963 1850 EBITDA (in Millions) Reflects results from continuing operations (unaudited). 2008 targets per Oct. 16, 2008 earnings release. BTU's Approach: Making Good Money in All Market Conditions $422 2008 Target $1,750- $1,850 Excellent leverage a
Slide 21: Peabody Energy 2008 FBR Capital Markets Fall Investor Conference
Peabody Energy 2008 FBR Capital Markets Fall Investor Conference December 3, 2008
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