UPDATE 2-Massey Q3 profit down, cuts '09 coal shipment view

* Q3 profit 19 cents/share vs 61 cents/share a year before

* Revenue drops 16 pct to $641.6 mln vs $687 mln forecast

* Trims 2009 coal shipment forecast to 37.5-38.5 mln tons

* Shares drop 4 pct
(Adds details on results and outlook, updates share price)

SAN FRANCISCO, Oct 27 (Reuters) - Massey Energy Co MEE.N,
which has idled coal mines to cut costs, reported a drop in
quarterly profit on Tuesday and trimmed its shipment outlook as
demand remained weak, knocking 4 percent off its shares.

"Coal contracting and shipment activities remained slow and
coal stockpiles increased during the third quarter of 2009 as
total electric power generation declined and switching to
natural gas fired generation continued," the coal miner said in
a statement.

But Massey pointed to increased steel production in China
and rising natural gas prices as positives amid the generally
difficult global market conditions.

Its third-quarter operating cash margin per ton was $11.98,
down from $16.10 in the same quarter last year.

Net income was $16.5 million, or 19 cents per share,
compared with $51.6 million, or 61 cents per share a year
earlier. Revenue slumped 16 percent to $641.6 million.

Analysts had expected earnings of 18 cents per share on
revenue of $687 million, according to Thomson Reuters I/B/E/S.

The Richmond, Virginia-based company said prices for its
coal were hit hard by the fact 70 percent of its shipments went
to the generally depressed utility sector [ID:nN15296040], up
from 65 percent a year ago.

Massey now expects 2009 produced coal shipments of 37.5
million to 38.5 million tons, down from a forecast in July of
38.5 million to 40.5 million tons.

For 2010, it expects shipments of 37 million to 41 million
tons -- bringing down the top end of the range by a million.

To cut costs, Massey has idled higher-cost mines, limited
overtime and renegotiated supply contracts. It has cut 700 jobs
this year and five senior executives, including Chief Executive
Don Blankenship, said they were taking 10 percent salary cuts.

Massey shares dropped 4 percent in after-hours trading on
Tuesday to $30.06, their lowest for more than two weeks. But
the stock has more than doubled in 2009, lifted by the
brightening economic outlook.
(Reporting by Braden Reddall in San Francisco and Steve James
in New York; editing by Matthew Lewis and Andre Grenon)