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Dec 16, 2008

Macarthur Coal down 22pc after 180 job cuts

MACARTHUR Coal shares fell 22 per cent today, after it downgraded its first half profit guidance, cut 180 jobs and suspended its interim dividend because of falling demand for coal used in steelmaking.

Macarthur will also defer some projects because of the global slowdown.

The company's shares plunged 78 cents, or 22.41 per cent, to $2.70.

Chief executive Nicole Hollows said the company had been hit by a sudden and unprecedented decline in sales of its main coal product.

Ms Hollows said there had been a jump in customers postponing coal shipments, as steel mill customers reacted to lower demand by cutting production.

"Some customers have advised they can't take coal for the March quarter,'' she said.

Macarthur now expects a net profit of between $75 million and $125 million for the six months to December 2008, down from its previous guidance of $150 million to $160 million.

Macarthur could not provide a more accurate earnings forecast because it may book a $48 million currency loss just from the fall in the Australian dollar this year.

Ms Hollows said there was uncertainty about future coal demand but the company expected a tough 6 months ahead, although markets could improve in second half of calendar 2009.

Up to 30 per cent of their workforce could be cut, because of a 25 per cent fall in production. Otherwise, coal stockpiles at its Queensland mines would become too big, she said.

About 180 staff, including contractors, will lose their jobs with the company.

Macarthur also revised sales target down from 5 million tonnes to 3.9 million in the 2009 financial year.

It also said it would not declare an interim dividend and would consider paying a final dividend at the end of this financial year.

Ms Hollows said the measures had not been taken lightly.

"The magnitude of the impact of the steel industry (downturn) now impacting the coal industry is quite significant,'' she said.

"We're doing what we can to make sure that we are prudent and continue to manage our costs and cashflow."

Other miners also announced job cuts today, with Xstrata coal cutting 40 jobs after suspending longwall operations at its Oaky No.1 mine in central Queensland due to reduced demand for hard coking coal.

Mining giant Rio Tinto last week slashed its worker headcount by about 14 per cent in response to slowing commodity demand.

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