Rio Tinto's NSW-based majority owned subsidiary, Coal and Allied, has revealed the benefit of not being a Queensland-based coal miner and exporter in the six months to June 30.

Coal and Allied (CNA) told the ASX yesterday that earnings for the first half of 2011 jumped 41% to $227 million, from the $161 million earned in the first half of 2010.

Revenue jumped 25% to $1.165 billion from $929 million in the first half of last year.

An interim dividend of $1.20 per ordinary share fully franked was declared, down from $4.50 in the first half of 2010 when the profit included an extraordinary profit from an asset sale.

Including that profit, earnings for the first half of 2011 of $227 million were 54% down on the $498 million earned in the first half of 2010 which included a gain on divestment of the Maules Creek and Vickery Coal Projects of $337 million.

The company said that excluding that one-off profit, earnings for the 2011 half year of $227 million, showed a 41% increase from the corresponding period in 2010 ($161 million).

"This was due to an increase in revenue through increased sales volumes and a higher realised US dollar price for coal offset by the detrimental effect of the stronger Australian dollar.

"An increase in production costs, largely associated with the increased volumes, has also earnings."

Coal & Allied's said its share of production for the 2011 half year was 11% up on the same period in 2010.

"Despite a significant amount of wet weather in June that saw over 20 per cent of calendar time lost, production at all sites finished the half year strongly, with second quarter production at Hunter Valley Operations (HVO) particularly strong compared to the same period in 2010.

"The initial benefits of the additional heavy mobile equipment commissioned over the last 18 months as part of Coal & Allied's expansion projects at HVO and Mount Thorley Warkworth (MTW) have significantly increased overburden removal (up 15 per cent from first half 2010 and 27 per cent from the first half of 2009) and are beginning to yield increased coal volumes.

"Sales revenue of $1,156 million for the 2011 half year was 27 per cent higher than for the same period in 2010 as a result of a 17 percent increase in sales volumes and a 25 percent rise in US dollar coal prices for the half year.

"The rise in prices has been partially offset by an increase in the strength of the Australian dollar, which rose 16 per cent against the US dollar compared to the first half of 2010, averaging 103 cents for 2011 compared with 89 cents in the comparative period," the company said.

Coal and Allied shares rose 92c to $103.10 at the close yesterday. The results were released after the end of trading.

In the context of yesterday's market, Australand Property Group securities didn't do too badly.

The securities finished the day off 3c at $2.63, around 7c above the 52 week low, but a better outcome than the near 1% fall for the wider markets as worries over the US debt ceiling and local inflation and interest rates took their toll on confidence.

In fact the result and market reception echoed that for Alesco on Tuesday which reported moderate earnings, a solid dividend and a continuation of the cautious, tough trading conditions for the remainder of 2011.

Australand told the ASX that net profit rose 17% to $84.78 million in the first half, with the group remaining "cautious" but "well-placed" to deliver on its guidance for the full year.

"The full year result is expected to be within our target range, as the Group's development earnings are typically skewed to the second half of the year," the company forecast yesterday.

The group said operating profit after tax rose 7% to $64.89 million, up from $60.43 million in the first half of 2010.

Australand delivered an interim distribution of 10.5 cents per security.

"Further progress has been made in progressively reducing the level of impaired and low margin projects and the development divisions remain positioned to achieve a return on average capital employed target of at least 12% by the end of 2012.

"Additionally, the Group continues to take steps to secure medium term earnings through the selective acquisition of several projects in Sydney and Melbourne.

"Economic conditions and sentiment softened in the first half of 2011, particularly in the second quarter.

"Consumers remain cautious, with further pressure on the cost of living, including higher utility and petrol prices as well as the effect of mortgage rate increases from late 2010.

"The positive impact from activity in the resources sector is yet to be felt in most other parts of the economy and, consistent with this, the Group remains cautious in its outlook for the remainder of 2011 but well placed to deliver on the following guidance.

"The Investment Property portfolio has low vacancy and no material leases expiring before 2012. With the sale of assets to the GIC logistics joint venture in June, full year EBIT is expected to be in line with 2010.

"Development activity in the Commercial & Industrial division will be underpinned by the delivery of our forward workload.

"We expect customers to remain cautious in committing to new space requirements in the near term but, given the low vacancy rates in both the office and industrial sectors, we anticipate that demand will improve during the second half and into 2012.

"The creation of the logistics joint venture with GIC provides a capital partner for investment in future product from the division's development pipeline.

"The Residential division has a healthy level of contracts on hand and with several new projects expected to produce sales in the second half, the division aims to deliver a 20% increase in sales volumes for the full year," directors said in yesterday's statement.

The interim distribution of 10.5c per stapled security is expected to be followed by a further distribution of 11c per stapled security for the second half of the 2011 financial year.

The company said the full year distributions of 21.5c per stapled security "represents approximately 5% growth on 2010, in line with previous guidance.

"Group operating earnings are expected to increase broadly in line with distribution growth," directors added.

Copyright Australasian Investment Review.
AIR publishes a weekly magazine. Subscriptions are free at www.aireview.com.au

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