Lower earnings expected for most coal miners in Q2 2023

Most US publicly traded coal companies are expected to book lower second-quarter earnings compared to the same period a year ago and the previous quarter, according to S&P Global Market Intelligence data.

Analysts forecast lower earnings per share and revenue quarter over quarter for seven of the eight coal companies included in Market Intelligence's analysis. Year over year, EPS for five companies is projected to decline, while lower revenues were forecast for four coal miners.

Coal prices have declined from their highs in 2022, with stocks building up as power demand remained weak amid mild weather. The US Energy Information Administration recently raised its US coal production forecast for 2023 to 572.2 million short tons from the previous estimate of 559.5 MMst, as the agency expects a "delayed response" by coal miners to lower consumption and high inventories.

Peabody Energy Corp., the largest coal company by market valuation, is the only coal miner in the group that is expected to report a higher EPS quarter over quarter. Analysts forecast Peabody's EPS at $1.81, rising 43.7% from the previous quarter but slumping 35.6% year over year. Its revenue was projected at $1.25 billion, declining 8.1% quarter over quarter and down 5.2% from last year.

Alliance Resource Partners LP is the only company in the analysis with an estimated higher revenue quarter over quarter. Alliance Resource Partners is expected to book a second-quarter revenue of $675.2 million, rising 1.8% from the first quarter and up 9.5% from a year ago.

Alpha Metallurgical Resources Inc., Consol Energy Inc., Arch Resources Inc., Warrior Met Coal Inc., Ramaco Resources Inc. and Hallador Energy Co. are all expected to post lower EPS and revenues in the second quarter compared to the first quarter.

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The companies with the highest estimated EPS are Alpha Metallurgical Resources and Arch Resources, which are both focused on supplying metallurgical coal used in steel production. Alpha Metallurgical Resources is expected to report an EPS of $12.69, while Arch Resources is projected to have an EPS of $6.03.

Ramaco and Hallador are both expected to book an EPS of less than $1 for the second quarter.

The Inflation Reduction Act fast-tracked the retirement of coal plants in the US. According to Market Intelligence data, over one-third of US coal produced in 2022 was delivered to power plants scheduled for retirement by 2042 or sooner.

Peabody and Arch Resources are scheduled to report their financial results on July 27.

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