Ongoing pressure on the coal sector resulted in further deterioration of the financial performance of Peabody Energy's Australian unit in the   March quarter, ahead of the company filing for bankruptcy in   April. 
Hit hard by the downturn in Chinese demand and the slump in US energy prices, Peabody Energy filed for Chapter 11 bankruptcy protection in the US last month. 
The quarterly earnings show that Australian coking coal mines - which mainly supply the global steel industry - have fallen into the red, while the recent decline in steaming coal prices is expected to further squeeze earnings of the balance of its Australian coal operations.
In the   March quarter, the group's Australian coking coal mines recorded a gross loss, as measured by earnings before interest, tax, depreciation and amortisation (EBITDA), of $US37.3 million - a steep reversal from the profit of $US13.6 million earned a year earlier.
The gross profit of its local steaming coal mines, which mainly supply power generators, fell to $US42.9 million from $US48.3 million a year earlier. This was before the 10 per cent price cut imposed on most steaming coal shipped into the key Japan market from   April 1, with the lower price expected to flow through to shipments elsewhere  in the region.
The   March quarter revenues of its Australian mines fell to $US338.8 million from $US548.2 million tonnes a year earlier, reflecting both lower coal prices coupled with lower output.
Of the revenue decline, $US148.3 million was due to lower prices received, it said, with the balance of the decline due to lower production which was partly because of heavy rainfall.
The group said weak demand from China continues to pressure global seaborne trading volumes of coal.
"The seaborne thermal coal segment remains well supplied which has led to weaker prices," it said in its latest quarterly report issued at the weekend.
One bright spot was the 4 per cent rise to $US84 a tonne in the   March quarter price for good quality coking coal, it said. More recently, the spot price topped $US100 a tonne, according to the latest information from S. McCloskey, before dropping back closer to $US90 a tonne. However much of the Peabody coking coal produced in Australia is of a lower quality product which sells at a significant price discount. 
The group's financial fortunes have been undermined by low gas prices in the US which has led to a steep fall in power sector demand for coal which, with a move to slash stockpiles, will slice as much as 210 million tons off US coal shipments, it said. Gas prices in the US are at 14-year lows, it said.
Peabody famously bought a series of coal mines in Australia near the top of the recent boom, which has compounded its financial woes.