The globally focused producer reported net earnings of $US204.7 million, compared year-on-year with $284.8 million.

Second quarter sales volumes were 57.4 million tonnes, level with the same period of last year.

Lower US production stemming from market-driven cutbacks was offset by increases at its Australian operations.

Conversely, it was US profit margins in the June quarter that helped lessen the blow of Australia’s margin slip by more than half versus the quarter prior, even with production slices from US mines.

Volumes from Australian operations rose about 2Mt but costs went up 10% on production challenges at Peabody’s contractor-operated mines as well as overburden removal costs completed as part of planned corrective actions at operations it had acquired.

Overall, revenue rose just 1% to $2 billion for the period ended June and US revenues went up 4% on higher realised prices from the Midwestern and western regions.

Australian revenues, meanwhile, were up 3% on a 26% volume jump tied to the company’s expanded and acquired operations.

It overcame a 19% decline in realised coal pricing from its lower benchmark settlements there.

Shipments from Australian mines totalled 8.2Mt, 23.6Mt of which was metallurgical coal.

Seaborne thermal coal accounted for 2.7Mt of the total.

“Peabody's diversified global platform continues to deliver solid cash flows and earnings in a choppy market environment,” Peabody chairman and chief executive officer Gregory Boyce said.

“While we see some bright spots within the global coal markets, there remain macroeconomic and industry challenges that Peabody is well positioned to weather given our global position and financial strength.

“In the United States, we have increased earnings contributions even in the face of lower volumes.

“And in Australia, we are addressing challenges through a number of initiatives to further strengthen our growing long-term platform.”

Boyce used a frequently heard phrase among operators as of late, “significant headwinds”, to describe the industry’s overall picture during the second quarter, as it seemed no one was immune to the drop in natural gas prices that left coal complex power generation facility customers with high stockpiles.

“At the same time, China coal imports reached record levels in the second quarter and third quarter global metallurgical coal prices have settled at higher levels,” he said.

The worry of a warm winter and low natural gas pricing has turned a bit for the positive thanks to hot summer weather that has increased generation demand for coal and Peabody said it noted above-average seasonal drawdowns in utility stockpiles.

Additionally, while Peabody is still projecting a decline in US coal demand of 100-120Mt this year, the nation’s gas prices have rebounded more than 50% since spring and coal consumption from the Powder River Basin has started to rise again.

Despite the ups and downs of the market and its own performance in the quarter, Peabody said it was continuing to make progress on wrapping up some of its late-stage projects in both countries, though it was re-evaluating timing for other development efforts.

In Australia, the producer delivered record quarterly shipments of thermal coal at the Wilpinjong mine following its expansion and the Millennium mine is adding volumes of metallurgical coal as it works toward the completion of its expansion during the third quarter.

Peabody will convert both from contract operations to owner-operator mines by next April to reduce costs and improve reliability, which will increase the Peabody share of owner-operated mines to about 75% of anticipated production this year in Australia.

Work removing overburden is about 80% complete at the Burton mine and it is now estimating 2014 or 2015 for the modernisation and expansion project at the Metropolitan mine to be ready for its anticipated 1.5Mt jump in annual capacity.

The company’s Eaglefield, Coppabella and Moorvale mines and Middlemount mine joint venture are all seeing progress in their respective improvement efforts.

In the US, Peabody recently inked a lease for more than 1.1 billion tonnes at the North Antelope Rochelle mine, a move that now leaves it with 4Bt of reserves in the PRB.

It also reached a long-term agreement with Kinder Morgan for more port capacity in the Gulf Coast region to support its export growth.

Looking ahead, the producer trimmed its outlook 5%, projecting a whole-year sales range between 230Mt and 250Mt.

It includes Australian sales of 31-34Mt – a 2Mt slice off its previous estimate – and 185-195Mt in the US.

The remainder will come from trading and brokerage activities.