Is AUD Actually Responsible For The Massive Half-Yearly Loss Of WLC?

  • Nov 21, 2018 AEDT
  • Team Kalkine
Is AUD Actually Responsible For The Massive Half-Yearly Loss Of WLC?

Wollongong Coal Limited (ASX: WLC) is a small fish in the coal industry. At present, it is going through a tough phase after the outcome of the half-year results. The company has encountered a massive loss of 143%. However, the company claims that this is due to the weaker Australian dollar. This year the loss was about $57.6 million. There was a net foreign exchange loss of $33.5 million and followed by a gain of $9.8 million in the same span if 6 months.

Due to the change in the exchange rates of the US dollar and Australian dollar on its USD borrowing, the impact was seen on the foreign exchange loss of WLC. As the coal market is gaining up, the company also witnesses an increase in 70% of the revenue which generated around $34.4 million within a span of 6 months.

In order to increase the revenue and desire for better coal prices, Wollongong who deals in metallurgical coal has put down its increased revenue.

Metallurgical coal possesses the features of low-ash, low-sulphur and low-phosphorus coal which is considered best for producing high-grade coking coal. Coking coal is one of the essential elements in the process of steel making.

Since the beginning current financial year, the price of the coke is gone up by nearly 42% and has reached the highest point since the month of March.

Last week, World Energy Outlook was released by The International Energy Agency which highlighted the growing international metallurgical coal market, especially in Asia.

The comparative study of the half-yearly results of FY2018 and FY2017 highlights that there was an increase in the revenue from the ordinary activities by 70%. However, loss after tax from the ordinary activities which was attributable to the owners of the company was 143%. The company could not pay any dividend. For the half year ended 30 September 2018, the company made a net loss of A$57.598 million. The balance sheet of the company shows a poor financial health of the company. The net liabilities of the company are A$137,885 million. This shows that the company is not in a position to meet its long-term obligations. It is neither in the position to meet its short-term obligations and the working capital as the current liabilities are much ahead of the current liabilities.

Also, there is an increase in the accumulated loss of the company as compared to the half-yearly results of FY17. This is another proof that the shareholder’s wealth is being eroded. By the end of half year of FY2018, the company is left with the cash and cash equivalent of 0.869 million.

Today the market price of the share was A$0.006 (AEST: 4 pm, 21 November 2018) which is close to 52 weeks low price. The market capitalization was A$56.2 million.


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