Peabody Energy Corporation · NYSE:BTU
Peabody Energy — Howard Weil Annual Energy Conference 2013
24 slides from Peabody Energy's conference presentation, Mar 18, 2013
Slide 1: Energizing The World One BTU At A Time
Energizing The World One BTU At A Time Howard Weil Annual Energy Conference Gregory H. Boyce Chairman and Chief Executive Officer March 18, 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 in Face of Improving Market Conditions
Peabody Well Positioned in Face of Improving Market Conditions Peabody Energy BTU delivered record 2012 safety results, revenues, Adjusted U.S. EBITDA and Australia sales volume 2013 coal markets improving globally and in U.S. Pacific Rim markets driving significant near- and long-term met and therm
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 Mu
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 Gross margins ~30% above U.S. peer group over past
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 Expect 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 250 MTPY of coal at full capacity Coal generation inc
Slide 8: Another Round of Global Supply Constraints Again Beginning to Emerge
Another Round of Global Supply Constraints Again Beginning to Emerge Peabody Energy U.S. exports expected to decline ~30 million tons in 2013 Strikes hinder mine production in several countries Mozambique and Mongolia shipments below targets Chinese regulators calling for closure of ~5,000 small min
Slide 9: Metallurgical Prices Improving on Increased Demand, Supply Curtailments
Metallurgical Prices Improving on Increased Demand, Supply Curtailments Peabody Energy Rising steel output in Asia drives global steel production higher in January Key Asia importing countries see rising steel production: China (+5%), India (+4%), Japan (+3%) Spot metallurgical coal prices rise shar
Slide 10: 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 11: China's Economic Growth, Coal Consumption Accelerating
China's Economic Growth, Coal Consumption Accelerating Peabody Energy January coal imports of 31 million tonnes up 56% over prior year February PMI in expansion for fourth straight month; Steel PMI of 58.9 at two-year high Fixed asset investment up 21% in first two months due to infrastructure spend
Slide 12: China, India Coal Imports Expected to Grow 8% - 10% in 2013
China, India Coal Imports Expected to Grow 8% - 10% in 2013 Peabody Energy China ~250 GW of new generation by 2017 Steel and generation build-out on coast encourages greater imports China moving to limit met coal production China mine cost inflation up >10% CAGR over past 5 years, pressuring margina
Slide 13: 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 14: U.S. Coal Supply Demand Fundamentals Rebounding Well in 2013
U.S. Coal Supply Demand Fundamentals Rebounding Well in 2013 Peabody Energy U.S. coal generation expected to rise 40 - 60 million tons in 2013 Gas-to-coal switching in play PRB and Illinois Basin coal competitive at $2.50 - $2.75 and $3.25 - $3.50 natural gas prices, respectively U.S. coal productio
Slide 15: PRB and Illinois Basin Expected to Serve U.S. and Global Markets
PRB and Illinois Basin Expected to Serve U.S. and Global markets Peabody Energy U.S. basins expected to see significant demand shift Lower-cost PRB and ILB generation expected to grow 20%+ by 2017 from new plants, basin switching and higher capacity utilization Current fleet only running at ~55% uti
Slide 16: 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 16
Slide 17: Peabody Energy Outlook
Peabody Energy Outlook
Slide 18: Peabody Targeting Four Primary Focus Areas
Peabody Targeting Four Primary Focus Areas Peabody Energy Achieve operational excellence in safety, productivity and production Reduce costs and improve capital efficiency at all levels of the organization Maximize cash flow to continue debt reduction Position Peabody to benefit during market recove
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 90% - 95% priced for 2013; 50% - 60% priced for 2014 Revenues per ton expected to be 5% - 10% below 2012 levels Intense focus on cost containment and capital discipline Expect stable
Slide 20: Australia Platform Targets Higher Volumes and Productivity Gains
Australia Platform Targets Higher Volumes and Productivity Gains Peabody Energy Targeting 7% - 14% increase of metallurgical coal volumes in 2013 Focus on costs and productivity improvements Target 2013 costs in the low $80 per ton range Key 2013 Projects: Owner-operator conversion on track for Apri
Slide 21: Significant Australian Assets Provide Earnings Platform and Growth
Significant Australian Assets Provide Earnings Platform and 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 bil
Slide 22: Capital Discipline, Debt Reduction a Top Priority
Capital Discipline, Debt Reduction a Top Priority Peabody Energy Targeting significant debt reduction Cash flow generation, capital discipline and asset monetization Debt-to-cap ratio goal of 40%-45% over time Targeting 2013 capital spend of $450-$550 million ~50% below 2012 levels Deferring early-s
Slide 23: 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 24: Energizing The World One BTU At A Time
Energizing The World One BTU At A Time Howard Weil Annual Energy Conference Gregory H. Boyce Chairman and Chief Executive Officer March 18, 2013 Peabody Energy
Peabody Energy — Howard Weil Annual Energy Conference 2013 on 6ix