Like a rabid beast, the contracting U.S. economy has attacked a bellwether industry yet again, and left a gaping wound in the outlook for domestic coal miners.
The king of coal roiled the sector with a 66% cut in net earnings to $79 million, from $233 million a year earlier. The comparable 2008 quarter, you'll recall, marked the very peak in the global coal market before a monster correction took hold last July. Also worthy of consideration: Results included a 47.7 million tax hit relating to an 18% drop in the value of the U.S. dollar relative to the Australian dollar. Adjusting for that currency impact, earnings from continuing operations precisely matched analyst estimates of $0.49 per share.
Anyone familiar with my coverage of the coal sector, steelmakers like POSCO
According to Peabody President and CEO Richard Navarre: "The Pacific markets continue to strengthen, with record net coal imports flowing into China and low stockpiles in India." Meanwhile, of the U.S. market, he states: "As a result of higher inventories, U.S. markets will take a longer time to rebound."
As of the end of the first quarter, Peabody Energy estimated a 90-million-ton reduction in total U.S. coal demand in 2009 over 2008. Rival Arch Coal
I continue to view the global king of coal as the very best the industry has to offer for investors, and renew my belief that Fools should distance themselves from certain domestic names, especially Appalachian miners like Massey Energy