Queensland-based Macarthur Coal had a similar story to Woodside and other resources group: both good news and not so good, with the promise of better times ahead.
Unlike oil and gas, coal prices seem bound to raise this year with contract prices for steaming coal into the Japanese market reportedly rising to more than $US90 a tonne, from the current price of $US75 a tonne.
The new price would apply from April 1, if agreement is reached in Tokyo, and would set a benchmark for other buyers, such as Taiwan and China.
Coking coal prices, both high grade hard, soft and pci type coals (pulverised coal injection), will also tipped to rise sharply from the current price levels.
Maccarthur Coal concentrates on the soft coking, pci and thermal coals, so the group is looking for higher returns (along with higher sales) in the rest of the 2010 financial year, and then into the 2011 year.
That’s why it didn’t seem too worried (nor did investors) about the 63% drop in interim net profit.
That had been in the market for a while after Maccarthur lifted its guidance for the first quarter last month after reporting higher shipments.
It again said that full year sales should be better than forecast originally.
Maccarthur said net profit for the six months to December 31 was $39.65 million, in the middle of the January range of between $37 million and $42 million.
Macarthur said sales revenue was $318.5 million, down 24% on the booming first of 2008-09 when coal prices were at record levels.
Underlying operating earnings before interest, tax, depreciation and amortisation (EBITDA) fell 53% to 95.9 million.
China remains the cause of the improvement as it sucks in more steelmaking material, coal for cement and power generation.
"The coal market is benefiting from the global steel production recovery,’’ Macarthur chief executive officer Nicole Hollows said in a statement to the market.
"Improved market conditions and innovative marketing strategies have allowed Coppabella and Moorvale mines to resume full production with two excavator fleets returning to service," she said.
Macarthur said it was on track to meet its increased full year sales forecast for the 2010 financial year, in the range of 4.8 to 5.0 million tonnes (Mt).
Late last year, Macarthur made a takeover offer for Gloucester Coal, and has bid for an interest in Middlemount Coal Pty Ltd from the Noble Group.
It also sought to purchase a 7% interest in the Coppabella and Moorvale Joint Venture from CITIC Resources Holdings Ltd.
Ms Hollows said the company was finalising documentation to progress the offers.
"Both the Gloucester offer and the Middlemount Transaction are subject to conditions that we are working through," Ms Hollows said.
"If all of these conditions are met, then the combination of the Macarthur Group, the Gloucester Group and 100 per cent of Middlemount will create a major Australian coal company with enhanced scale and market presence," she said.
It abandoned its talks over Donaldson Coal, another small NSW producer.
