The revenues and earnings of Peabody Energy in Australia dropped dramatically in June due to high operating costs and weak coal prices. The coal mining company has already tried to implement cost-cutting measures but to no avail.

Peabody said the global seaborne coal trade will continue to experience growth in 2013 in the hopes of reaching 1.2 billion tonnes. The expected growth will be buoyed by increasing demand of China, India and Japan for additional coal-fired power generation.

Peabody also said the increase in global volumes is due to cutbacks to high-priced output in China. The U.S. and China, the world's largest coal energy producers, have reduced their production estimates. Peabody Energy expects more cutbacks especially in the second half of 2013.

U.S. exports dropped to 30 million tonnes in June. Further cuts are expected for the remainder of the year as legacy contracts are set to expire.

Peabody Energy has previously announced its plan to intensify its efforts to cut costs starting with job cuts in Australia. In June, Peabody Energy Australia's earnings fell to $US112.5 million from $US240.4 million from the previous year. The figures are earnings from operations before interest, tax, depreciation and amortisation.

The company's revenues in Australia also went down to $US112.5 million from $US884.9 million in 2012. Peabody said the low coal price had cut an estimated $US200 million off from the company's expected gross profit. Adverse geological conditions also affected coal production at the Burton and North Goonyella mines.

Peabody's earnings fell sharply despite the rise in tonnage sold from the company's mines in Australia. Coal sales went up to 8.6 million tonnes for the June quarter from the previous year's 8.2 million tonnes.

For the rest of 2013, the company expects little change in the production of Australian mines with output forecasts said to be between 33 and 36 million tonnes.

The price of coal fell to $US86.44 per ton in June from $US107.45. Peabody's margins from mines in Australia dropped to $US13.05 from $29.19 per ton from 2012.

Peabody has been working more aggressively to cut operation costs, including a plan to cut capital spending by 20 per cent. The company has recently cut additional 170 jobs from its New South Wales and Queensland mines, following the previous job cuts of 450. The total number of jobs lost in the coal mining sector has reached 11,000.

The Australian dollar decline had contributed to Peabody's competitiveness in Australia. Despite this improvement, operating costs only fell slightly to $US73.39 from $US78.26 a tonne in 2012.

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