Centennial’s third-quarter results revealed, as expected, reduced output attributable to production woes at Newstan and longwall relocations at a number of mines. Production dropped 2% for the September quarter to 3.6 million tonnes.

ABN-AMRO Morgans reduced its total saleable production forecast for financial year 2006 by 0.2Mt to 17.6Mt, just 2.7Mt higher than 2005 sales.

“Despite the longwall relocation at Angus Place and two more longwall relocations at Tahmoor scheduled for FY06, we believe this production target is achievable,” it said.

The brokerage decreased its 2006 NPAT forecast marginally to $A113 million from $A117 million primarily as a result of reduced Newstan output.

It said uncertainty surrounding Japanese financial year 2006 coal price negotiations was the greatest risk to its forecasts and anticipated a 10% contract price drop across the board.

“Although cautious in the short term, we expect FY06 and FY07 cash flow to be very strong, enabling Centennial to improve Tahmoor productivity (as it moves into the longer longwall panels in 1QFY07), develop Anvil Hill and provide significant returns to shareholders.”