UPDATE: Centennial Coal Fiscal Year Profit A$71.2 Million, Flags Higher Exports
August 18 2009 - 11:35PM
Dow Jones News
Centennial Coal Co. (CEY.AU) posted a full year profit at the
upper end of its guidance Wednesday and said it expects a recent
spate of Chinese buying of Australian coal to continue.
The miner also said it is confident it has enough port capacity
to underpin its plans for growing exports, despite a court ruling
that could see it cede capacity to Xstrata PLC (XTA.LN), revealing
it is studying an expansion of its Port Kembla facilities.
Centennial made a full year net profit of A$71.2 million, down
from A$288.6 million last year when asset sales boosted earnings,
but at the upper end of its guidance range for between A$65 million
and A$72 million.
The Sydney-based miner said in a statement that profit from
ordinary activities climbed 20% to a record A$82.0 million from
A$68.1 million.
Centennial said coal production in fiscal 2010 is expected to be
slightly higher than in fiscal 2009 and that exports are expected
to rise by 25% to 5 million metric tons in fiscal 2010, as the
miner implements plans to boost its exposure to the higher-margin
export market.
The company said it continues to experience consistent demand
for its thermal coal, with little sign of demand weakness evident
and customers still firmly focused on security of supply.
Managing Director Bob Cameron said Centennial is continuing to
receive inquiries from Chinese coal buyers and expects Australian
coal sales to China to continue.
Centennial and other Australian coal miners have this year begun
exporting coal to China in the face of weaker demand from
traditional Asian customers, but questions have been raised over
whether the trend will persist as freight rates rise.
"We continue to receive significant inquiries from Chinese
companies, particularly power companies, of course, and we have
been doing business with them and they are now becoming a very
important part of our mix," Cameron said.
"Our view is that China will remain a net importer of coal and
this is to the benefit of ourselves and Indonesia."
Revenue for the year climbed to A$886 million from A$764 million
last year and Centennial posted a final dividend of 4 cents a
share, down from 17 cents last year when it boosted the payout in
the wake of asset sales.
Cameron also said the company is confident it will have
sufficient port capacity for its plan to boost exports, despite a
court ruling that Xstrata should be given access to its share of
capacity at the Newcastle Coal Infrastructure Group, or NCIG,
development.
Centennial is appealing the court ruling and Cameron said it is
also talking to Xstrata and the New South Wales state government
about the implications of the ruling.
The court's decision applies only to coal produced at Xstrata's
Mangoola development, so Centennial can use the new NCIG
infrastructure for the next few years, and Cameron said the miner
also has the ability to move more material through Port Kembla
rather than Newcastle at little extra cost.
Cameron said Centennial is also actively looking at an expansion
of Port Kembla.
"We, as a board, have resolved to - and are doing - studies on a
potential expansion of Port Kembla," he said.
-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094;
alex.wilson@dowjones.com
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