Takeover favourite last week, now a rare profit upgrade: Macarthur Coal has certainly had a busy few weeks.
And, it seems that for once in the past couple of years, it’s been good news from Queensland’s strained coal handling infrastructure, rather than the usual litany of bad reports. The company had better than expected coal shipments last month, allowing for the improved profit outlook.
The company yesterday increased its annual profit guidance by around 19% after a rise in expected sales.
Without the takeover talk, yesterday’s upgrade would have been enough to get most analysts re-rating the company’s outlook for 2008-09.
It now expects net profit after tax (NPAT) of between $80 million to $90 million for 2007-08, less than two months after providing guidance of $67 million to $75 million for the year.
"The revised NPAT forecast follows increased coal sales and shipments in June, due to a reduction in the vessel queue at Dalrymple Bay Coal Terminal, providing the ability to load more vessels than forecast," acting chief executive Peter Kane said in a statement.
Macarthur shares gained a few cents in the morning, by then went for a good gallop in the afternoon, finishing up nearly 12%, or $1.80 at $17.10.
It was a big reversal of the weakness seen after a stalemate appeared on the share register with ArcelorMittal, the world’s biggest steel maker, Posco of South Korea, the world’s number 4 and the Chinese trader, CITIC having large stakes, but not able to exert control.
Once the market saw that there would be no bid, despite Posco buying its 10% stake at $20 a share and Arcelor getting some of it’s 19.9% for around the same price, the shares plunged.
They went lower in the bumpy trading this week, but jumped sharply on the unexpected good news.
Mr Kane said the revised forecast demonstrated a substantial improvement in the second half of the year for the company, compared to the first half profit of $13.5 million.
Macarthur’s largest customer ArcelorMittal is now the company’s biggest single shareholder with a 19.9% stake.
Chinese group CITIC has a 17.7% interest, while Posco – another Macarthur customer – has a 10% stake. Former founder, Ken Talbot’s holding in Macarthur now sits at 4.76%.
Macarthur supplies more than a third of the world’s pulverised coal from its two operations, Coppabella and Moorvale, which are in Queensland’s Bowen Basin.
Its results have been hit in the past two years by the shortage of capacity on Queensland railroads and in the export ports, forcing it to cut shipments and earnings. Its mines were affected by heavy rain earlier in the year.
"The current upgrade to our profit guidance comes as a result of higher than expected coal deliveries in June,” Mr Kane said in the statement to the ASX.
"This is particularly pleasing considering operations at Coppabella continue to suffer residual effects from flooding in the Bowen basin earlier in the year.”
The company will report a $28 million gain on the sale of a 19.61% in the Monto Coal 2 mine, it also said.
And Retail Food Group Ltd (RFG) is another with good news for the market, although its improvement has been long anticipated since a slew of acquisitions in the past year.
The company, which is a ‘carb’ retailer in that it sells yummy things like donuts, French style pastries and bread, as well as coffee and other food, has gained a bigger footprint in the Australian retailing sector as a result of its purchases.
It said yesterday that it now expects full year profit to rise by at least 116% thanks to the acquisitions of the popular Brumby’s Bakeries and Michel’s Patisserie franchises.
The company said unaudited accounts point to a net profit between $16.3 million and $16.8 million for the year to June 30, 7/08, up from the $7.52 million earned in the 2007 year.
It also expects earnings per share (EPS) to grow by around 75% to 18.4 cents, from 10.5 cents, beating its guidance for EPS of 15.75%.
CEO, Tony Alford said in a statement to the ASX that "The business operations of RFG and its franchise systems performed strongly throughout the financial year notwithstanding the well founded and highly publicised commentary regarding continued deterioration in discretionary spending and depressed consumer sentiment,"
RFG bought the Brumby’s Bakeries and Michel’s Patisserie franchise systems in the first half of the financial year.
It said increases in network revenues, due to new outlet growth and average weekly sales growth across each of the company’s Donut King, bb’s café, Michel’s Patisserie and Brumby’s Bakeries franchises have also contributed to the result.
RFG will report its full year figures next month.
RFG shares jumped 12 cents to $1.35, a rise of 9.7% on the day.
