Macarthur Lowers Net, Australian Stocks Drop

123jump.com Staff
16 Dec, 2008
New York City

Australian market averages plummeted led by Macarthur Coal after the company lowered its first half profit forecast. Macarthur Coal dropped 22% on the new estimate and lowered estimate. Stock market index dropped 1% on the weakness in mining sector.

[R]3:00AM New York, 7:00PM Sydney - Macarthur cuts first half profit guidance to A$75 million.[/R]

Australian market averages plummeted led by Macarthur Coal after the company lowered its first half profit forecast on waning demand for pulverized coal sags as the global economic recession deepens.

In Sydney trading ASX 200 index fell 1% or 35.2 to 3,556.20.

Of the ASX 200 index stocks, 55 rose, 138 declined, and 7 were unchanged. Timbercorp Ltd. led advancers in the index shares with a rise of 23.8%.

RBA Opted For Expansionary Policy

Reserve Bank of Australia reported today in minutes on the December 2 monetary policy meeting that the bank had decided to pursue a “clearly expansionary” policy stance by aggressively slashing the key rate to 4.25%.

The report notes that the Board wanted a reduction of the cash and bank lending rates that was big enough to have a recognizable effect on the financing decisions of lenders and borrowers.

“Accordingly, members felt that, on this occasion, a reduction of 100 basis points was appropriate and would contribute to supporting confidence among households and businesses. In particular, a reduction of this size would move monetary policy quickly to an expansionary setting,” noted RBA statement.

U.S. Industrial Production Falls 0.6% in November

New York Federal Reserve reported yesterday that industrial production slid 0.6% in November as exports dropped and carmakers cut production.

The utilization rate, which gauges production as a share of the potential, declined to 75.4% from an average 79.7%.

New York Fed said its Empire State index declined to - 25.8 from -25.4 in November, while new orders rose to - 20.8 from - 22.2 in the previous month.

Manufacturing outlook for the following six months increased to 19.5 from 13 a month earlier.

Gainers & Losers

Timbercorp led advancers in the ASX 200 index shares with a rise of 23.8% followed by increases in OM Holdings of 11.1%, in Great Southern Ltd. of 10.2%, in Corp. Express Australia of 8.5%, and Duet Group of 8.3%.

Macarthur Coal led decliners in the ASX 200 index shares with a fall of 22.4% followed by losses in Macquarie Office of 21.2%, in Linc Energy of 14.6%, in Valad Energy of 13.6%, and Goodman Corp. of 13.3%.

Macarthur Coal fell after it cut its first half profit forecast to A$75 million from an earlier projection of A$150 million.

Other commodity stocks also fell after Xstrata said it will suspend longwall mining at the Oaky No 1 underground coking coal mine in Queensland on falling demand.

Gloucester Coal slid 12.2%, Centennial Coal fell 11.6% and Fortescue Metals dipped 10.3%.

Macarthur Coal Cut H1 Profit to A$75 million

Macarthur Coal today slashed its first half profit forecast to between A$75 million and A$125 million from the previous forecast to A$150 million and A$160 million on falling demand for pulverized coal sags.

Sales target was reduced for fiscal 2009 to 3.9 million tons from the previous estimate of 5 million tons.

The company said the new forecast accounts for an impact of A$48 million from currency hedging. The miner has also lowered its coal sales target for fiscal 2009 to 3.9 million tons from previous guidance of 5 million tons.