Whitehaven Coal Expects Record FY Earnings on Coal-Price Surge — Update

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By Rhiannon Hoyle

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Whitehaven Coal Ltd. expects to record its strongest-ever full-year result because of a surge in coal prices and an improved operational performance, and said that rising cash reserves will enable it to fund both growth projects and shareholder returns.

The Australian miner on Monday said it will likely report earnings before interest, taxes, depreciation and amortization of roughly 3.0 billion Australian dollars (US$2.0 billion) for its fiscal year through June. Whitehaven, which is due to report its full-year result on Aug. 25, recorded Ebitda of A$204.5 million a year earlier.

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Whitehaven has a “strong balance sheet with cash reserves to fund future growth and also return capital to shareholders through franked dividends and share buy-backs,” said Chief Executive Paul Flynn.

Whitehaven had a net cash balance of A$1.0 billion at June 30.

Whitehaven is already buying back shares, and aims to purchase roughly 10% of its share capital for up to A$550 million.

Coal prices set a new record during the quarter and continue to be well supported, Mr. Flynn said. Whitehaven reported a record average coal price of A$514 a metric ton for the quarter and A$325 a ton for the year through June.

“Global supply constraints continued during the June quarter, particularly for high quality thermal coal,” the company said in its quarterly report.

Customers in Northeast Asia were focused on topping up stockpiles for the northern hemisphere summer, while “non-traditional buyers” of Australian thermal coal, including in Europe, also emerged.

“The European coal import embargo from Russia is due to commence in August, which is expected to tighten further the supply of high-quality thermal coal,” said Whitehaven.

The miner met fiscal-year production and sales targets despite a tight labor market and Covid-19-related absenteeism, Mr. Flynn said.

Full-year so-called run-of-mine production from the sites it manages totaled 20.0 million tons, down 3% year-on-year but at the higher end of its earlier estimate of 19.0 million-20.5 million tons.

At 17.6 million tons, managed sales of produced coal were down 1% year-on-year but also at the upper end of company guidance. Whitehaven had estimated full-year sales of 17.2 million-17.8 million tons.

Still, Whitehaven said full-year costs are likely to be around A$84 a ton, at the top end of its A$79-A$84 a ton guidance range, as it grapples with broad cost pressures.

“The company has incurred higher diesel prices, higher labor costs including Covid-related absenteeism, and increased demurrage costs as a result of weather impacts at the Port of Newcastle and coal supply disruptions,” it said.

Write to Rhiannon Hoyle at [email protected]

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Credit: www.marketwatch.com /

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