Cloud Peak Cuts Forecast: Coal Prices 'Unsustainably Low'

Cloud Peak Energy Inc.

shares fell more than 8 percent Tuesday after the Wyoming coal producer said a continued rail bottleneck will result in lower-than expected 2014 shipments. The company also cut nearly 6 percent from its 2014 forecast of adjusted earnings before interest, taxes and depreciation. Results for 2015 "are expected to be lower than 2014" Chief Executive Colin Marshall said in a statement, citing lower shipments and currently weak coal pricing. Marshal expects a rebound in 2016, but as of now, coal prices are are "unsustainably low" and aren't providing economic returns to "a large number of major producers," The company forecast 2015 EBITDA of $120 million "if coal prices were to remain at recent depressed levels." A $1 per ton improvement in domestic prices could result in adjusted EBITDA for 2015 of $180 million, depending on the timing of improved prices and actual shipments, the company said. Shipments for 2014 from its three owned and operated mines are now expected between 83 million and 86 million tons, compared with its July forecast of 85 million to 89 million tons. Cloud also cut its 2014 adjusted EBITDA forecast to between $170 million and $200 million from $180 million to $210 million, Cloud recently gave up $1.22, trading at $14.49 a share.