Coal producer and explorer, Macarthur Coal (MCC) reported on Wednesday a 68% fall in half year net profit due to wet weather and coal logistics problems.
The result however did not surprise investors, and despite this fall, stock rose 26 cents or 2.2% to $12.02, trading in a range between $11.20 and $12.14.
The Brisbane-based company reported net profit after tax (NPAT) of $13.5 million for the six months to 31 December 2007, down from $42.40 the previous corresponding period.
“Although NPAT was significantly down on the previous corresponding period, it is within previous company guidance and market expectations,” the company said.
“Macarthur Coal’s profits were primarily affected by a reduction in sales due to allocation reductions in order to reduce the ship queue and the construction works associated with Phase 1 expansion of the Dalrymple Bay Coal Terminal.”
Logistics problems have troubled the coal industry across the board, resulting in a build up of coal inventories for the company.
However, the company says these stockpiles, which have built up over the last 12 months, should see total sales meet previous guidance levels.
In late January heavy rain led the company to declare force majeure after it disrupted mining operations at the Coppabella and Moorvale mines in Queensland.
During the six months, sales revenue fell 33.1% to $144.6 million.
Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 64.6% to $22.8 million, while EBIT fell 72.9% to $15.4 million from $56.9 million the previous corresponding period.
In regard to full year profit guidance, Macarthur was unable to provide a figure due to the unknown coal price currently under negotiation, unknown carry over tonnage and possible downside risk to sales if the wet season intensity continues.
“Although Macarthur Coal has had a challenging six months and still has some hard work to do over the remaining half of the 2008 financial year, we are very optimistic about the coal price for the next financial year,” chief executive officer Nicole Hollows said.
“With coal demand strong and supply constrained, it is likely that higher coal prices, and higher sales as a result of infrastructure upgrades, will result in a very positive outcome for the 2009 financial year.”
Macarthur declared an interim dividend declared of 3 cents per share, down from 11 cents the previous corresponding period, while earning per share (diluted) were 7.2 cents per share, down from 22.6 cents per share.
The company holds a 73.3% interest in the Coppabella and Moorvale mines joint venture.
