The loss was primarily driven by a $188.7 million tax provision differential due to a lower Australian tax benefit and higher US earnings compared with the prior year.

The diluted loss from continuing operations and adjusted diluted loss both totalled 28c a share.

The company’s revenues increased 2% to $1.76 billion, primarily due to a 1% rise in sales volumes to 61.7 million short tons and finalisation on a long-term western coal supply agreement. This was partly offset by lower Australian results.

US mining revenues rose to $1.03 billion as an increase in both western shipments and realisations overcame a decline in Midwestern volumes and revenues per ton.

Australian revenues fell 5% on lower realised pricing.

Sales from Australia total 9.7Mt, including 4.8Mt of metallurgical coal and 3.1Mt of seaborne thermal coal.

Cost initiatives and improved operating results largely offset a $155 million impact from lower seaborne coal prices. This resulted in adjusted earnings before interest, tax, depreciation and amortisation of $213.1 million – down $41.2 million from the prior year.

US mining adjusted EBITDA increased 12% to $291.9 million on a 5% rise in volumes and a 6% gross margin expansion from higher realisations and lower costs.

Australian mining adjusted EBITDA declined to $12.2 million due to lower pricing.

Meanwhile in Australia, costs per ton decreased 1% thanks to improved longwall performance and cost reduction initiatives.

Trading and brokerage-adjusted EBITDA was $6.3 million.

Resource management-adjusted EBITDA totalled $1.7 million. That was down considerably from the $42.4 million from the prior year, although that period benefited from the sale of surplus reserves and surface lands in the Midwest.

Ongoing capital efficiency improvements and higher equipment availability led to second quarter capital spending of $40.3 million.

Total liquidity remains at $U2.1 billion, including nearly $500 million in cash.

Peabody chairman and CEO Greg Boyce said the company’s US operations delivered higher second quarter results and its Australian “platform completed many operational milestones and improved costs in the face of challenging market conditions”

Those Australian operational milestones included the commissioning of the North Goonyella and Metropolitan longwalls.

“US coal demand has been expanding for the past two years and our team continues to respond to seaborne market conditions by improving operational efficiencies, reducing costs and maximising cash flow generation,” Boyce said.

“Peabody expects that accelerating supply cutbacks and rising demand will lead to improving seaborne market fundamentals heading into 2015.

“While the current seaborne markets are still experiencing supply pressures, coal remains in strong demand and now accounts for its largest share of global energy use in more than 40 years.

“The world continues to turn to coal as a competitive fuel source and ongoing urbanisation and industrialisation trends are expected to drive long-term global coal demand growth.

“In the US coal supplied 92% of the incremental electricity demand in the first quarter and second quarter coal generation remains strong.

“Southern Power River Basin inventory levels are expected to fall further below normal by end of the summer on higher demand and continued rail performance issues.”

By 2016 annual global coal demand is expected to rise to more than 600Mt.

Peabody expects about 250 gigawatts of coal-fuelled generation will be built over the next three years, requiring an additional 750Mt of annual thermal coal.

Over this same period China and India coal imports are expected to grow to 100Mt and ongoing urbanisation and industrialisation is projected to drive a 10-15% increase in seaborne metallurgical coal demand.

Peabody is targeting 2014 Australian sales of 35-37Mt including 16-17Mt of met coal and 11-12Mt of export thermal coal.

The company’s projected 2014 US production is essentially fully priced with 2015 sales 20-30% unpriced based on comparable 2014 production levels.

Peabody is focusing on several initiatives:

• Optimising benefits from the fully commissioned longwall top coal caving system at the North Goonyella mine, including greater automation of underground equipment and increased yields;
• Capitalising on increased productivity from the new longwall at the Metropolitan mine. So far longwall performance has exceeded planned production targets and reached available mine capacity since installation in April;
• Maximising the benefits of the recent owner-operation conversions and completing the owner-operation transition at the Moorvale mine in the third quarter; and
• advancing the reserve development at the Gateway North mine in Illinois to replace production from the existing operation in 2015. Slope construction is underway and ahead of schedule.