Macarthur Coal has sharply upgraded its earnings outlook.
The upgrade, while anticipated because of the rise in coal prices this year, especially in Asian markets, nevertheless looks a bit less than expected by the market, judging by the fall in the share price yesterday.
The price fell 44c, or 3.5%, to close at $12.13 after the update was released at the AGM in Brisbane.
The company said it expects first half profit to more than double to the range of $115 million to $125 million, from $39.6 million for the first half of the 2010 year.
At the top end of the forecast, the profit for the December half could equal the $128.8 million earned for all of 2009-10 which was down 25.8% from the record levels of 2008-09.
The June 2011 half year will see momentum slow because of the rebound in the same half of the 2010 year, but earnings should still be up enough for Macarthur to be looking at record all time profits for the 2010-11 year.
Macarthur said the expected higher first half profit was also due to a higher proportion of LV PCI (low volatile pulverised coal injection) coal sales.
Macarthur said the profit forecast for the first half of the 2010-11 financial year was based on the assumption it would achieve its planned shipping schedule of 2.5 million tonnes (Mt) to 2.7Mt.
It also assumed no significant unbudgeted weather events affecting production and/or infrastructure complaints, no non-cash accounting adjustments and the valuation of financial derivatives at December 31 having no material affect on profit.
Macarthur said the first half result is seeing higher prices in US dollar sales are being partially offset by a strong Australian dollar and slightly increased mining costs.
CEO Nicole Hollows told the AGM that the company was in a strong financial position with robust operating cashflows due to a recovery in export markets and its $438.7 million equity raising in August.
Ms Hollows said there had been seasonal weakness and destocking with lower sales prices during the current quarter, but a recent rebound in Chinese steel prices and improved demand had lifted spot prices.
She said Macarthur expected improved conditions in the March quarter for metallurgical coal sales prices.
Its PCI settlements for the December quarter were in line with other settlements in the market and it had hedged its contracts for the period to offset the strong Australian dollar.
Infrastructure delays had eased in the first half, but its exploration drilling was affected by wet weather.
Ms Hollows said Macarthur remained on track to reach its full year sales target of 5 million tonnes, 93% of which will be sales of low volatile PCI coal.
However, she said there were currently too many uncertainties, particularly surrounding quarterly sales prices and foreign exchange rates, to provide profit guidance for 2010/11.
Ms Hollows also said development of the Middlemount mine in Queensland was on schedule, but commissioning of the coal handling and preparation plant had been delayed.
Ms Hollows said one of the company’s priorities this financial year was to reduce overburden mining costs at its Coppabella mine and trim mining expenses at its Moorvale operation.
Stockland has lost $208 million on its lengthy, but unsuccessful play in the securities of rival shopping centre group and property developer, GPT.
Stockland sold its 13.1% stake on Tuesday night and early yesterday and crystalised a loss.
The sale came a week after the company’s AGM in Sydney which didn’t mention the prospective sale.
Stockland, which is the country’s biggest diversified property group, sold the 243 million GPT securities for A$2.75 a share to existing investors, according to an ASX statement yesterday.
The GPT securities, which were held in an off balance sheet derivative structure, was acquired in November 2008 at an average entry price of $3.60.
Stockland Managing Director Matthew Quinn said in the statement the exposure was acquired when GPT was in a weak financial position, was undergoing significant board and management change, and there was potential to use the stake to acquire GPT’s quality retail assets.
"Since we acquired the stake, GPT has restructured its balance sheet, strengthened its board and management and there is now little prospect of acquiring assets. It is therefore in the best interests of our securityholders to exit our position and focus on other growth opportunities," Mr Quinn said.
"I am disappointed and regret the loss suffered by our securityholders. We are committed to building securityholder value through our 3-R strategy, focusing on our core strengths of Residential Communities, Retirement Living and Retail development."
Stockland now owns 83% of Sydney-based retirement group, Aevum. It also holds 14.8% in FKP Property Group, another retirement and property group backed by Malaysian interests.
Stockland maintained its forecast for 7% earnings per share growth for the year ending June 30, 2011.
"The transaction has no impact on the Group’s guidance of 7 per cent EPS growth for FY11.
"The Group’s gearing (net debt/TTA) will increase by 0.5% and NTA will decrease by around one cent" the co
