Record high export coal prices during the first three quarters of the 2008-09 financial year saw revenue from Wesfarmers’ coal division soar 84% from the previous year to $2.41 billion.
Earnings before interest and taxes reached $915 million, up 116%.
Total coal sales volumes from the Curragh mine in Queensland’s Bowen Basin increased by 9% to 9.8 million tonnes.
Despite major damage to a dragline boom in December, with the machine returned to service in May, the mine posted record metallurgical coal production of 6.7Mt.
The $130 million Blackwater Creek diversion project at Curragh to provide access to an extra 47Mt of run-of-mine coal remains on target for December 2010 completion.
While the Varanus Island gas explosion in Western Australia hurt Wesfarmers’ energy division and delayed the commissioning of the company’s liquefied natural gas plant in Kwinana by three months, the disruption led to an increase in thermal coal demand from its Premier open cut mine near Collie.
Premier’s sales volumes increased 20% for the financial year as the state had to increase coal-fired electricity generation.
From its 40% stake of the Bengalla open cut mine in the New South Wales Hunter Valley, which is operated by Rio Tinto Coal Australia, Wesfarmers said record EBIT and thermal coal prices were achieved.
The current feasibility study to expand the mine’s production from 8.7Mt to 10.7Mt is continuing.
Costs affecting Wesfarmers’ coal operations during the period included record government royalties of $208 million and Stanwell rebate payments totalling $170 million, along with hedge book expenses and operational spending to lift production.
Lower export coal prices and demand are expected to decrease earnings for the current financial year but Wesfarmers expects Curragh’s metallurgical coal sales to be in the range of 6.2-6.7Mt.
For its non-coal business, Wesfarmers said the turnaround of its Coles supermarket chain was continuing to meet expectations.
Its Bunnings and Target stores performed well, with Wesfarmers saying the business transformation of Kmart is at an early stage.
Wesfarmers said it remained cautiously optimistic for the next 12 months and was viewing underlying retail trading conditions as somewhat volatile and difficult to predict.
The company reduced net debt by $4.8 billion during the year, putting the net debt to equity ratio at 18.3%, while ending June with a cash position of $2.12 billion.
A final fully franked dividend of 60c per share has been declared, taking the full-year dividend to $1.10 per share.
The record date for the final dividend is August 31 and it will be paid on October 1.
Shares in Wesfarmers closed 3.7% down to $25.51 yesterday.
