UPDATE: Coal & Allied 1st Half Net Profit Up 54%; Almost Triples Dividend

Coal & Allied Industries Ltd. (CNA.AU) said Tuesday net profit for the half year ended June 30 rose 54% on year but excluding one-time divestments it fell 50%.

In an interim report, the company said net profit rose to A$497.8 million from A$323.6 million but excluding the divestment of its Maules Creek and Vickery coal projects, the figure fell to A$161 million, lower than most broker expectations.

The company hiked its interim dividend payout to A$4.50 a share compared to an interim payout of A$1.60 a share last year and a full-year total of A$3.50 a share in 2009.

Chris Drew, an analyst at RBC Capital Markets, said that the dividend was ample compensation for the "slightly weak" profit figure.

"It probably reflects the cash they'd got in from those sales" of the Maules Creek and Vickery coal projects, he said.

The dividend was covered just 1.27 times by the company's earnings per share of 574.9 cents, but Drew said that wasn't a concern.

Coal & Allied shares, which were in negative territory in early trading, closed up 12 cents or 0.1% at A$99.60 after the earnings report. The benchmark S&P/ASX 200 index rose 0.3% to 4497.4 points.

Southern Cross Equities director Charlie Aitken said the dividend payout was a positive sign for Australia's upcoming earnings season.

"I think you are going to see capital management surprise all through the Australian reporting season," he said. "Australian resources have too much capital. They will either use it or lose it, by giving some back to shareholders or taking someone over."

Coal & Allied has three operations in the Hunter Valley coal-producing region near the New South Wales state port of Newcastle, and is 76% owned by Rio Tinto Ltd. (RTP).

The company said its equity share of coal production in the six months to the end of June totalled 8.9 million metric tons, while its share of shipments was 8.4 million tons.

Revenues for the half year slipped 26% to A$929.1 million from A$1.25 billion.

Coal & Allied blamed the stronger Australian dollar and a lower U.S. dollar coal price, as well as an increase in production costs due to rising strip ratios from lower-quality coal seams, for the fall-off between revenues and normalised profits.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]

(David Rogers in Sydney contributed to this article)