Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Investor Presentation (May 2013)
25 slides from Peabody Energy's investor presentation, May 29, 2013
Slide 1: May Investor Presentation
Life Empowered May Investor Presentation May 2013 Peabody Energy
Slide 2: Statement on Forward-Looking Information
Statement on Forward-Looking Information Peabody Energy The use of the words “Peabody,” “the company,” “our” and “we” relate to Peabody Energy Corporation, its subsidiaries and majority-owned affiliates. Certain statements in this presentation are forward-looking within the meaning of Section 27A of
Slide 3: Peabody Well Positioned for Rising Global Demand and Rebound in U.S. Coal
Peabody Well Positioned for Rising Global Demand and Rebound in U.S. Coal Peabody Energy Peabody global asset base and strategy targets success in all market conditions Leading presence in growing regions: Australia, SPRB and Illinois Basin Benefitting from cost containment, capital discipline and d
Slide 4: Peabody: The Only Global Pure-Play Coal Investment
Peabody: The Only Global Pure-Play Coal Investment Peabody Energy The World's Largest Private-Sector Coal Company 28 Active mines in U.S. and Australia 9.3 billion tons of reserves U.S.: 8.2 billion tons Australia: 1.1 billion tons Significant project portfolio Global trading and business offices Lo
Slide 5: Diverse Revenues and Strong Cost Containment Drive Superior Margins
Diverse Revenues and Strong Cost Containment Drive Superior Margins Peabody Energy 2012 Revenue by Product Western U.S. Thermal Australian Met Australian Thermal Trading & Brokerage Midwest U.S. Thermal Global platform provides diverse contributions Average gross margins ~30% above U.S. peers over p
Slide 6: Global Coal Markets
Global Coal Markets
Slide 7: Coal Market Demand Rising in 2013 on Higher Steel Production, Generation
Coal Market Demand Rising in 2013 on Higher Steel Production, Generation Peabody Energy Forecast global steel production growth of ~3% driving increased need for metallurgical coal >75 GW of coal generation expected to come on line in 2013 Requires 225 MTPY of coal at full capacity Coal generation i
Slide 8: Seaborne Met Demand Beginning to Recover from Low 2012 Steel Growth
Seaborne Met Demand Beginning to Recover from Low 2012 Steel Growth Peabody Energy 9% higher Q1 China steel production driving global growth Q2 HQHCC benchmark increases to $172/tonne; Low-vol PCI improves spread to 82% of premium Substantial project deferrals and mine idlings in 2012 as premium pri
Slide 9: PCI in Growing Demand from Global Steel Producers
PCI in Growing Demand from Global Steel Producers Peabody Energy Steelmakers increasing PCI use to reduce costs, improve margins Pulverized Coal Injection a replacement for coke made from coking coal 1.1 tonnes of low-vol PCI replaces 1 tonne of coke Peabody is #1 exporter of low-vol PCI Majority of
Slide 10: China, India Coal Imports Expected to Grow 10% - 15% in 2013
China, India Coal Imports Expected to Grow 10% - 15% in 2013 Peabody Energy China Coal imports up 30% in Q1 Coal generation up 4% Q1 7.7% GDP growth exceeds government targets Urbanization expected to send 15 to 20 million people to cities each year ~250 GW of new coal generation by 2017 China and I
Slide 11: Global Supply Constraints Expected to Continue
Global Supply Constraints Expected to Continue Peabody Energy U.S. exports expected to decline ~25 million tons in 2013 Strikes hinder mine production in several countries India domestic production struggling to meet demand as imports rise Mozambique and Mongolia shipments below targets Idling or cl
Slide 12: Annual World Coal Demand Expected to Grow ~1.4 Billion Tonnes in Five Years
Annual World Coal Demand Expected to Grow ~1.4 Billion Tonnes in Five Years Peabody Energy Expected Global Coal Demand (Tonnes in Millions) 0 2,000 4,000 6,000 8,000 10,000 2012E 7,665 ROW 2,975 China 4,000 India 690 2013P 7,950 2,990 4,240 720 2017P 9,050 3,175 5,000 875 New coal-fueled generation
Slide 13: Major Market Signals are Positive for U.S. Coal to Rebound in 2013
Major Market Signals are Positive for U.S. Coal to Rebound in 2013 Peabody Energy Natural Gas Prices - Nearly Double Prior Year Natural Gas Generation - Down 14% YTD Coal Generation - Up 11% YTD Coal Shipments - Down 7% YTD SPRB/ILB Inventories - 25% Below Prior-Year Levels 2013 U.S. Coal Demand Exp
Slide 14: PRB and Illinois Basin Coal Use Expected to Grow >25% Over Next 5 Years
PRB and Illinois Basin Coal Use Expected to Grow >25% Over Next 5 Years Peabody Energy Peabody's Primary Regions: 130 Million Ton Increase Through 2017 Cumulative Generation Changes: 2012 - 2017 (Tons in Millions) Retirements - Other (40) PRB/ILB (30) New Generation - Other +5 PRB/ILB +10 Utilizatio
Slide 15: Coal Expected to Overtake Oil as World's Largest Energy Source in 2013
Coal Expected to Overtake Oil as World's Largest Energy Source in 2013 Peabody Energy Primary World Energy Demand by Fuel Million Tonne of Oil Equivalent 2000 2005 2010 2013 2015 2020 2025 2030 Coal Oil Natural Gas Nuclear Hydro Renewables Source: Wood Mackenzie Energy Service 15
Slide 16: Peabody Energy Outlook
Peabody Energy Outlook
Slide 17: Peabody Targeting Four Primary Focus Areas
Peabody Targeting Four Primary Focus Areas Peabody Energy Achieve operational excellence Reduce costs and improve capital efficiency Maximize cash flow to continue debt reduction Position Peabody to benefit during market recovery 17
Slide 18: Cost Containment Initiatives Taking Hold Across the Platform
Cost Containment Initiatives Taking Hold Across the Platform Peabody Energy Strong first quarter cost performance U.S. costs per ton in line with prior year, despite 12% volume reduction Australia costs per ton declined 10% SG&A down 8% Lowered full-year cost per ton targets for U.S. and Australia A
Slide 19: U.S. Platform Well Positioned in Current Market
U.S. Platform Well Positioned in Current Market Peabody Energy Targeting 180 - 190 million tons of production in 2013 Fully priced for 2013; 55% - 65% priced for 2014 Revenues per ton expected to be 5% - 10% below 2012 Expect costs per ton 2% - 3% below 2012 Optimizing operations to maximize margins
Slide 20: Australia Platform Targets Higher Volumes and Productivity Gains
Australia Platform Targets Higher Volumes and Productivity Gains Peabody Energy Targeting increased metallurgical coal volumes in 2013 Focus on costs and productivity improvements Target 2013 costs of ~$80 per ton Key 2013 projects include owner-operator conversions at several operations and install
Slide 21: Owner-Operator Conversions to Enable Cost Savings, Improved Management
Owner-Operator Conversions to Enable Cost Savings, Improved Management Peabody Energy Successfully completed the owner-operator conversion at Wilpinjong, Millennium and Wambo Open-Cut mines Increases owner-operator production from ~35% to ~85% Full benefit of the conversions expected as year progres
Slide 22: Significant Australian Assets Provide Platform for Growth
Significant Australian Assets Provide Platform for Growth Peabody Energy Peabody Australia Platform $9.6 billion of investments over past decade Acquisition of RAG, Excel and Macarthur Greatly expanded capacity of thermal and met coal for seaborne market Australia segment generated $3.1 billion in A
Slide 23: Exercising Capital Discipline and Continuing Debt Reduction
Exercising Capital Discipline and Continuing Debt Reduction Peabody Energy $200 million in debt repayment by May 2013 brings total to more than $600 million over 12 months Targeting 2013 capital spend of $450 - $550 million ~50% below 2012 levels Deferring early-stage growth projects Q1 capital spen
Slide 24: Peabody Platform Shaped to Meet Needs of Changing Markets
Peabody Platform Shaped to Meet Needs of Changing Markets Peabody Energy Rising coal exports from Australia Leading position in low-cost SPRB and Illinois Basin Aggressive focus on cost control across platform Solid operating cash flows, low maintenance capex needs and focus on debt reduction Managi
Slide 25: Peabody Energy www.PeabodyEnergy.com
Peabody Energy www.PeabodyEnergy.com Life Empowered