Yancoal Reported Record High FY2018 Profits, Stock Edged Up By 15.94%

Yancoal Reported Record High FY2018 Profits, Stock Edged Up By 15.94%

Yancoal Australia Limited (ASX: YAL) has announced a record net profit after tax of AUD 852 million in the financial results for the full year ended December 31st, 2018 (FY2018), staggeringly high and more than triple than the AUD 229 million achieved in the previous fiscal year (FY2017), reflecting a financial turnaround, demonstrating exceptional growth and robustness of their operational, investment and cashflow management strategies.

The company, established in 2004, is a subsidiary of Yanzhou Coal Mining Company Limited and engaged in the exploration, development, production, and commercialisation of metallurgical and thermal coal across Singapore, China, Japan, Taiwan, South Korea, Australia and other countries worldwide.

YAL has a market cap of AUD 4.23 billion. With the close of the market session on February 26th, the YAN stock’s last sell-off price stood at AUD 3.710, zoomed up by 15.94%, indicating an intra-day gain of AUD 0.510, following the company’s outstanding full performance update.

As per the latest report, the revenues for the year have been posted at AUD 4,850 million mainly driven by an expansion in the production at a ripe time of consistent high prices of metallurgical coal and thermal coal across the global markets. During the concerned period, the Group realised average prices for thermal coal and metallurgical coal products at AUD 123 (FY2017: AUD 102) and AUD 182 (FY2017: AUD 165) respectively, representing the average overall price of AUD 132 (FY2017: AUD 114).

The total saleable coal production was around 50.0 million tonnes (32.9Mt attributable), up by 59% from 31.5Mt (18.5 Mt attributable share) in FY2017. Of the total coal sales, Thermal coal sales constituted 81% (FY2017: 72%) based on sales tonnes.

Yancoal also recorded a total operating EBITDA of AUD 2,180 million, primarily resulting from a full year’s equity contribution of AUD 718 million from Mount Thorley Warkworth and AUD 513 million from Hunter Valley Operations, both acquired back in September 2017. Also, a favourable EBITDA also included the additional benefits of a full year’s underground production achieved at the Moolarben Coal Complex, contributing AUD 871 million to the equity.  In addition, the total Operating EBIT stood at AUD 1,657 million, up AUD 925 million on the prior year.

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Furthermore, the FY2018 net operating cash inflow of AUD 1,747 million was up AUD1,339 million on the prior year. The investing activities contributed to cash outflows of AUD 55 million, with the receipt of AUD 524 million for the sell-down of 16.6% in the Hunter Valley Operations joint venture (JV) to Glencore Coal, largely offsetting Yancoal’s AUD 353 million buy-out of Mitsubishi Development Pty Ltd’s 28.898% interest in the Warkworth JV and the operating capital expenditure of AUD 194 million in FY2018.

Besides, there were cash outflows from financing activities comprising the net repayment of AUD 1,014 million in interest-bearing liabilities, using improved cash from operations along with some part of the AUD 268 million raised as part of the global offering associated with the company’s listing on the Stock Exchange of Hong Kong (HKEx). Yancoal ended the year with net cash and cash equivalents of AUD 1,031 million to payout final dividend and further debt repayment of USD 500 million, thus taking down the company’s total debt liabilities by USD 1.4 billion since completion of the acquisition of Coal & Allied in September 2017.

Interim dividends totalling AUD 130 million were rewarded in September 2018, and final dividends amounting AUD 211 million and special dividend of AUD 166 million, have been declared to be paid on March 30th, 2019. The total dividend payments of AUD 507 million for FY2018 depict a pay-out ratio of ~60%.


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