Chairman Andy Hogendijk told shareholders at the company’s annual general meeting today that in the area of profit results the company achieved a better than expected profit after tax of $23.4 million for the year to August, which was an increase of 30% on the previous year.

“This result was very pleasing in light of the difficult conditions which prevailed during the year, namely high exchange rates, congestion at the port and cost pressure resulting from unprecedented demand generally in the resources sector,” he said.

“Despite these pressures it was pleasing to see the operations performing strongly and continuing to make improvements.”

Hogendijk said fundamentals for the coal sector remained strong despite the current global financial crisis, demand for its coking coal would continue to be strong and the outlook for thermal coal also looked positive.

“Looking forward, and notwithstanding some shorter-term issues associated with the current global financial situation, we believe the fundamentals for our coal business remain very sound,” he said.

“Our quality coking coal with high fluidity will continue to be in strong demand by steel producers.”

Hogendijk told shareholders the industrialisation and urbanisation of large developing economies such as China and India over the next 10 to 20 years would continue to drive significant demand on the world seaborne traded market for coking coal.

“Thermal coal too looks to be a positive story as new coal-fired power stations are being built to meet the growing and baseload energy requirements of an industrialising Asia,” he said.

Hogendijk added the company had already locked in contract prices for the bulk of its coking and thermal business, with coking coal contract prices set at more than $US300 a metric ton and thermal coal contracts for the year to June 30 all locked in at new prices of more than $US130 a ton.

“This should enable us to produce strong surplus cash flows and we expect to report a record profit for the year,” he said.

Chief executive Rob Lord said the company was well placed to weather the economic storm sweeping the world.

“These conditions are obviously affecting the resources sector, our coal sector peers and the Gloucester Coal share price,” Lord said.

“The members of the board, the senior management and myself have watched with concern as our share price has fallen to its current levels.

“I am confident that, over time, our share price will recover to reflect the strong investment fundamentals of the company.”

Shares in Gloucester Coal jumped 14% in morning trade to $4.10.