Centennial's 2nd-Half Profit Gains Almost Threefold on Prices

By Jesse Riseborough

Aug. 20 (Bloomberg) -- Centennial Coal Co., Australia's fourth-largest coal producer, reported an almost threefold gain in second-half profit on surging prices for the fuel.

Net income increased to A$49.1 million ($43 million) in the six months ended June 30, from A$18.4 million a year earlier, according to figures derived by subtracting first-half numbers from Sydney-based Centennial's full-year results released today.

Prices for coking and thermal coal surged to records this year amid supply constraints and rising demand in Asia. Centennial plans to start production at a new A$100 million underground coal mine at Airly, New South Wales state, in 2010.

``The strength of our operations and high prices bode well for a significant uplift in profitability for the 2009 financial year,'' Chief Executive Officer Bob Cameron said in a statement to the Australian stock exchange.

Centennial, the third-best performer on Australia's benchmark index this year, rose 6.8 percent to A$5.02 as of 11:32 a.m. on the exchange. The stock has gained 68 percent this year, compared with a 23 percent decline in the S&P/ASX 200 Index.

The company reported an 87-fold increase in full-year profit to A$288.6 million after one-time gains from the sale of mines to Xstrata Plc, according to the statement. The result was in line with analysts' estimates.

Centennial booked a A$223 million profit from the sale of the Anvil Hill mine and its 86 percent stake in Austral Coal Ltd. last year. Profit from continuing operations rose to a record A$64.3 million from $6.8 million a year earlier, while sales increased 8.8 percent to A$763.9 million on higher prices for both coking and thermal coal.

Centennial's share of coal sales from 12 mines in New South Wales state for the year was 15.4 million metric tons, down 7 percent from a year earlier. Its Airly mine is expected to start at an initial output rate of 1.6 million tons a year.

The company supplies about 47 percent of the state's coal- fired electricity. The company exports about a third of its coal to power stations and steel mills in Japan, Korea, India and Europe through ports at Newcastle and Port Kembla.

To contact the reporter on this story: Jesse Riseborough in Melbourne at jriseborough@bloomberg.net