Whitehaven Coal (ASX:WHC) H1 reflects coal price impact, brighter H2 expected

Summary

  • Whitehaven Coal (ASX:WHC) observed the impact of subdued coal prices on its first-half earnings.
  • Coal production went up by 28%, while sales moved up by 3%.
  • The company expects to achieve the pre-pandemic level for its sales volume in 2021.

ASX-listed Whitehaven Coal Limited (ASX:WHC) has ended the first half of FY21 with a loss, largely on account of lower coal prices driven by COVID restrictions. However, the thermal and metallurgical coal producer is expecting strong outcomes in the second half of the current financial year.

(Source: WHC ASX Update, dated 17 February 2021)

First-Half Financial Highlights

Net revenue stood at A$699.3m, 21% down from A$855.1m in H1 FY20. Whitehaven posted a net loss of A$94.5m in H1 FY21 compared to a net profit after tax of A$27.4m in H1 FY20. EBITDA was down by 79% year-on-year to A$37.2m, affected mainly by lower coal prices of A$80 per ton during H1 FY21 compared to A$108 per ton in H1 FY20.

Total cash generated in the half-year period was also less by 55% on pcp to A$54.9m. Additionally, WHC posted an increase in net debt to A$823.1m at end-December 2020 from A$787.5m at end-June 2020.

However, the company reported strong available liquidity of A$411.8m and improved operational performance with unit cost per tonne of A$70.

(Source: WHC ASX Update, dated 17 February 2021)

Good Read: Why are the shares of Whitehaven Coal (ASX:WHC) trading higher?  

Operational Highlights

For the half-year period of FY21, coal production was up by 28% to 7.7Mt. Operations during the period were highly impacted by dust and smoke events and a scheduled longwall change-out at Narrabri underground mine.

  • Maules Creek - coal production increased by 24% to 5.2Mt
  • Narrabri Underground Mine - coal production stood at 2.6Mt, up by 30%  
  • Gunnedah Open Cut Mines – coal production reached 1.8Mt, up by 35%

Total coal sales went up by 3% to 8.7Mt, backed by increased production. Metallurgical coal sales accounted for 14% of the total sales during the first half.

(Source: WHC ASX Update, dated 17 February 2021)

The company posted a total recordable injury frequency rate (TRIFR) of 5.41 at end-December 2020, significantly lower compared to the NSW coal mining average of 12.79.

2021 Guidance

(Source: WHC ASX Update, dated 17 February 2021)

The company expects to achieve the pre-pandemic level sales volume in 2021, on the back of increased energy demand in Asia and supply curtailments.

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