Coal gives Soul a bumper first-half result

A BUMPER return from the booming coal market has helped investor Washington H. Soul Pattinson boost profit by 20 per cent and given its shareholders a 20th consecutive lift in dividends.

The investment group with interests across coal, building products, pharmaceuticals, telecommunications and financial services, lifted underlying net profit 19 per cent to $166.4 million in the six months to January 31.

Soul Pattinson’s 50 per cent stake in Queensland coal miner New Hope delivered a $64.5 million boost to Soul’s bottom line, as soaring coal prices and improved production lifted the miner’s half year earnings by 63 per cent.

The value of the New Hope stake rose as the miner’s share price improved by almost 60 per cent in the half, a major contributor to a 16.5 per cent increase in the value of Soul Pattinson’s total portfolio to $5.2 billion.

Chief executive Todd Barlow said the resources sector had performed well and he expects coal prices in particular to remain robust in the months ahead. “I think we are seeing robust activity across the economy and across our portfolio,” Mr Barlow said.

“Coal prices continue to be very high and the increasing industrial activity around the world is driving demand.”

He said rising commodity prices had also improved returns from Soul’s copper, gold and zinc investments.

The group’s 44 per cent stake in building material supplier Brickworks, which on Thursday reported a four per cent lift in underlying net profit, contributed $22.8 million to Soul Pattinson’s profit.

Its financial services portfolio, and its 25 per cent stake in internet provider TPG were also strong contributors to the result. Mr Barlow said TPG’s financial performace was particularly pleasing, given the challenges for internet providers created by customers being migrated to the national broadband network.

“We saw TPG increase their result which was a surprise to us because they were able to offset the impact of the NBN through cost-cutting and various growth initiatives in the company,” Mr Barlow said.