Even though Macarthur Coal had good news on the profit front yesterday, the market wasn’t listening, or so it seems.
In fact the good news flowed from the bad news: the floods in Queensland which cut production and sales for the company and others have boosted prices of coking and thermal coal.
In the case of Macarthur the boost offsets the sharp fall in lost or postponed sales and lower production.
The company said yesterday in a trading update that the record prices for metallurgical coal means its annual net profit will be up sharply from the 2010 result.
But the suggested profit range, $185 million to $205 million, was a little rubbery because it includes a profit of $41.9 million on the sale of part of one of its mines.
Stripping that out leaves a profit range of $143 to $163 million, still good, but nowhere near as spectacular as a profit around $200 million or more from just selling coal.
The new annual profit guidance is up from actual net profit of $125.1 million in 2009-10.
Macarthur at the same time lowered its production guidance for 2010-11 (June 30) to 3.8 million tonnes to 4 million tonnes from earlier guidance of 4.1 – 4.3 million tonnes (made at the start of last month).
The company last week lifted the force majeure declaration on shipments that had been in place from late last year.
Macarthur’s CEO Nicole Hollows said in the statement the effects of the significant wet weather conditions across the Bowen Basin, although disappointing, had led to record prices for metallurgical coal in the June quarter, Macarthur’s last quarter of the 2010-11 year.
"This increase in price has more than offset the impacts of the decreased production and increased costs on the full year profit compared to the previous corresponding period.
"This is an impressive result given that force majeure was in place for five months of the 2011 financial year.
"The Company is now focused on returning to full production to achieve the revised sales tonnage target of 3.8Mt to 4.0Mt," Ms Hollows said.
The profit guidance is higher than 2009/10 due to "significantly higher (US dollar) sales prices (partially offset by a strong Australian dollar, slightly higher mining costs, and the impact of lower production levels due to the extreme wet weather)", Ms Hollows said.
It also was due to Macarthur’s sale of its interests in Middlemount Coal Pty Ltd to Gloucester Coal Ltd, which returned the company $41.9 million.
Ms Hollows said the profit guidance was dependent on achieving its shipping schedule, no significant unbudgeted weather events, accounting adjustments and volatility in the Australian dollar.
Macarthur shares ended down 32c, or 2.9%, at $10.82.
