Its Australian margins may have expanded to $6.48/t as cost improvements overcame declining market conditions but Peabody will now reduce annualized metallurgical coal production by 1.5 million tons at the North Goonyella mine, 1.2Mt at the Coppabella mine and 600,000t at the Metropolitan mine.

The company has reduced its 2015 metallurgical sales target by approximately 1Mt to reflect the remaining impact of lower production and inventory sales, it said.

"Peabody is implementing a series of actions at its operations to increase productivity, decrease costs, improve cash flows and reduce coking coal and low-vol PCI volumes given current market conditions," it said.

"The company now targets a workforce reduction of more than 300 positions across multiple mines in Australia, and is lowering metallurgical production by approximately 3 million tons per year."

The coal giant reported a total June quarterly adjusted EBITDA of only $87.0 million, which was down from $213.1 million in the previous corresponding period, and includes $21.2 million in restructuring charges related to reductions in corporate and regional staff and Australian mining operations.

Quarterly revenues for the company came in at $1.3 billion compared to the $1.7 billion for the previous corresponding period.

Australian mining adjusted EBITDA increased $50.5 million to $55.8 million in the second quarter, as about $160 million in cost improvements overcame $90 million in lower pricing.

The improved Australian cost scenario includes the benefit of lower currency and fuel rates.

Australian costs per ton for 2015 are targeted to be nearly 20% below 2014 levels due to cost reduction initiatives, sales mix, and lower currency and fuel expenses, the company said.

Australian quarterly volumes totalled 8.6Mt, including 4.1Mt of metallurgical coal at an average realized price of $79.16 and 2.8Mt of export thermal coal at $54.70/t, with the remaining 1.7Mt delivered under domestic thermal contracts.

Peabody Energy CEO Glenn Kellow said: "Peabody accelerated a number of initiatives in the second quarter to reduce operating costs, create a leaner organization and optimize our portfolio.

"As we manage through extended low-cycle market conditions, Peabody is taking aggressive actions on multiple fronts to preserve and enhance long-term value."

Second quarter results include impairment charges of $900.8 million, including $718.6 million primarily related to certain producing and non-producing Australian metallurgical coal assets, and $182.2 million from US assets held for sale and not affiliated with Peabody's mining segment operations.

US mining adjusted EBITDA declined $80.1 million to $211.5 million, primarily due to a 6.4Mt volume decline and an 8% decrease in average price per ton. US costs per ton improved 4% due to cost reductions and lower fuel prices.

Powder River Basin margin per ton totalled $3.11 in the second quarter, and includes a weather-related impact of approximately $0.65/t.

Adverse weather reduced PRB volumes by approximately 5.5Mt, primarily from the North Antelope Rochelle Mine, and the company expects to increase shipments in the second half of 2015.

Peabody believes US coal demand will decline 90 to 100Mt in 2015, with coal projected to comprise about 35% of total US generation.

US coal exports declined 14Mt through June, and are anticipated to drop by 30 to 35Mt in 2015.

US coal supply decreased 13% in the second quarter, and additional production cutbacks are expected in the second half of the year.