UPDATE 1-Macarthur Coal lifts profit forecasts by 34 pct

Wed Jul 9, 2008 10:08pm EDT

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PERTH, July 10 (Reuters) - Australian coal miner Macarthur Coal Ltd (MCC.AX) raised its 2008 profit outlook on Thursday by as much as 34 percent due to better sales than expected, helping its shares erase early losses and rise as much as 5 percent.

Macarthur, the subject of recent takeover speculation involving top global steel maker ArcelorMittal (ISPA.AS), said 2008 net profit would be in a range of A$80-A$90 million ($76-$85 million), up from a previous forecast of A$67-A$75 million.

Macarthur said the rise was due to higher-than-expected coal sales in June, helped by a reduction in vessel queues at the Dalrymple Bay Coal Terminal in the northeastern state of Queensland that had allowed more vessels to be loaded.

"This is particularly pleasing considering operations at Coppabella continue to suffer residual effects from flooding in the Bowen basin earlier in the year," Macarthur's acting chief executive, Peter Kane, said in a statement.

Early this year, flash floods in coal-rich Queensland forced Macarthur to halt operations at its key Coppabella coal mine and to default on its sales commitments.

Full-year profit will also boosted by a one-time gain of A$28 million from the sale of its 19.6 percent stake in the Monto Coal 2 asset, Macarthur said.

Shares in Macarthur, which were down as much as 5.8 percent at the start of trading, reversed losses to stand 4.7 percent higher at A$16.01 by 0202 GMT.

Macarthur's shares rose to a record high of A$21.21 on June 18 on speculation that ArcelorMittal would launch a takeover bid.

But ArcelorMittal ended talks with Macarthur after acquiring a 19.9 percent stake. A subsequent move by South Korea's POSCO (005490.KS) to buy a 10 percent stake in Macarthur also dampened takeover speculation as the purchase was seen as blocking any such move.

POSCO became the third overseas investor to hold a major stake in Macarthur. China's CITIC Resources Holdings (1205.HK) has a 17.66 percent interest. ($1=A$1.05) (Reporting by Fayen Wong)