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Walter Industries Shares Plummet

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By RUSSELL RAY

rray@tampatrib.com

Published: November 20, 2008

TAMPA - Shares of Walter Industries, which peaked at more than $111 in July, have plunged to around $19 because of a sharp decline in demand for steel-making coal.

The stock was recently downgraded by Friedman Billings Ramsey to "market perform" from "outperform."

"For 2009, we continue to see weaker steel demand due to a slowing global economy, particularly in steel-consuming industries such as real estate, automobile and oil and gas drilling," Friedman analyst Luther Lu said in a note to investors.
Lu also lowered his 12-month price target on the stock to $30 from $53 and expects the stock to remain flat through March.

Tampa-based Walter is a major producer of metallurgical coal, with mines in Alabama. Metallurgical coal is a key ingredient in steel production.

Although global demand for steel has softened, the company says sales of its high-quality metallurgical coal should remain strong as steelmakers stop buying lower-quality coals first.

In the third quarter, which ended Sept. 30, Walter earned $55 million, or 97 cents a share, up from $24.4 million, or 46 cents a share, during the same period last year. Executives attributed the improvement to higher coal prices.

Reporter Russell Ray can be reached at (813) 259-7870.

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