Rio Tinto Ltd subsidiary Coal & Allied Industries Ltd is confident of an improved profit performance in 2000. The effects of lower coal prices were being offset by higher sales volumes, restructuring and amalgamation of operations the company said.
"The continuing fall in coal prices demonstrates the need to further lift productivity and reduce costs at all of our operations," said Coal & Allied chairman Barry Cusack at the company's AGM in mid-April.
"There have been further reductions this year with a drop of approximately five per cent in market reference prices," Cusack said. "As a result, contract prices for both thermal and coking coal will be lower this year. Despite these challenging market conditions, Coal & Allied continues to operate profitably by maintaining a clear focus on margins while working constantly to improve market share."
Sales revenues were $528.1 million compared with $588.3 million in 1999. A consolidated profit after tax of $67.6 million was reported in February (compared with $88.5 million in 1998). The full impact of lower coal prices was partly offset by higher sales volumes, following the purchase of the Howick mine, and a reduction in costs. This had a positive impact on operating earnings of $32.4 million.
Cusack said the restructuring of the Mount Thorley operations in the last quarter of 1999 and the ongoing amalgamation of the Hunter Valley number one and Howick mines were contributing to offset the impact of falling coal prices.
Coal & Allied said the longer term outlook was strong for coal which remained the cheapest fuel available for the continuing electrification of Asia and a fuel of importance in growing internet usage.
