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Macarthur Coal, the world's biggest exporter of pulverised coal, cut its profit forecast and suspended its dividend as customers deferred shipments, sending its shares plunging the most on record.
Macarthur's shares fell 22 per cent after it predicted a profit between A$75 and A$125 million ($90 and $150 million) in the six months ending December 31.
That was as much as 53 per cent lower than the Brisbane company's forecast last month.
The global recession has curbed demand for steel, prompting mills in Asia, Europe and North America to slash purchases of raw materials.
ArcelorMittal, the world's biggest steelmaker, asked to reduce shipments this quarter, Macarthur Coal chief executive Nicole Hollows said last month.
Andrew Harrington, a mining analyst at Patersons Securities, said, "We've seen a massive and sudden dislocation in demand, and the steel mills have more or less pulled up the drawbridges and they don't want to be taking coal."
Macarthur fell 78c to A$2.70 on the Australian ASX-200 stock exchange yesterday, the most since it was listed in July 2001 and the lowest in four years.
Xstrata said it would suspend operations and cut 230 workers at a coking coal mine in Australia as demand slumps.
BHP Billiton, the world's largest coking coal exporter, also said yesterday it would not be immune to the "uncertain" market.
There has been "a sudden and unprecedented reduction in coal sales as a result of postponement of coal shipments by some customers", Macarthur said in the statement to the Australian stock exchange.
"There is considerable uncertainty as to future movements in demand and when recovery will take place."
The company will cut 180 jobs, review projects and may defer developments, the statement said. Macarthur will also suspend its interim dividend and will consider a final dividend at the end of the 2009 fiscal year.
Production from its Moorvale and Coppabella mines will be reduced, resulting in a 22 per cent cut in its 2009 fiscal year sales forecast to 3.9 million tonnes.
"We are acting now to manage cash flow and costs in order to weather the current storm," Chairman Keith De Lacy said.
ArcelorMittal, owner of a fifth of Macarthur Coal, said last month it was cutting output by more than 30 per cent, and Japanese rivals, including Nippon Steel, have widened production cuts.
Posco, which owns a 10 per cent stake in Macarthur Coal, said it might consider output cuts next year. Spokesman Choi Doo Jin said Posco had not asked to reduce or delay shipments from Macarthur Coal.
Patersons' Harrington said: "Even with the lower profit guidance for the first half of fiscal 2009 they are in a relatively liquid position in terms of cash.
I don't see there is any question about the company's survival. The company is trading at a four-year low so it might represent some decent value."
Goldman Sachs JBWere on Monday cut its forecast for pulverised coal prices to US$85 a tonne for shipments starting April 1, a 65 per cent decline from the record US$245 a tonne this year. The analysts, led by Melbourne's Neil Goodwill, cut their price target for Macarthur 28 per cent to A$4.15.
- BLOOMBERG