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MELBOURNE - Centennial Coal expects a "substantial uplift" in 2008 profit as prices and output rise, helping it to recover from a slump in earnings last year.
Australia's second-largest coal company by sales said prices for coking and thermal coal would increase this year and production at the Tahmoor mine should rebound from lower-than-expected output last year.
"The strength experienced in the market is not just short term, with the future outlook also predicted to remain strong," Centennial said, adding the price of coking coal, used in steel-making, was heading for the record reached in 2005.
Profit for the year to June 30 will probably be between A$30 million ($33.08 million) and A$40 million before a A$34.1 million writedown for faults at the Newstan mine. Centennial had net income of A$17.1 million the previous year.
The spot price of coking coal has risen to more than US$110 a tonne and is heading for the US$125 reached in 2005. BHP Billiton, the world's largest exporter of coking coal, settled benchmark coking coal prices for this year at US$98 a tonne.
Centennial said the price of thermal coal, used by power stations, might rise to US$70 a tonne in 2008. Its highest-priced contract for this year was US$55.65.
Centennial also said fourth-quarter shipments fell 16 per cent after it relocated part of its Mandalong mining and storms delayed shipping. Sales fell to 3.7 million tonnes for the three months to June 30, from 4.3 million tonnes a year ago.
- BLOOMBERG
