Whitehaven Coal Limited (ASX: WHC) tightens carbon emission disclosure ahead of ASIC guidelines

  • Oct 08, 2018 AEDT
  • Team Kalkine
Whitehaven Coal Limited (ASX: WHC) tightens carbon emission disclosure ahead of ASIC guidelines

With the target of becoming a leading Australian producer of High Efficiency Low Emissions (HELE) coal, Whitehaven Coal Limited has decided to be more committed to bring down the carbon emission to a considerably low level.

Whitehaven told the ASX late on Friday that in a wake of carbon conscious future the company is reviewing the Task Force on Climate Related Financial Disclosures (TCFD) as recommended by ASIC for voluntary reporting on climate related financial risks into the WHC’s 2019 reporting.

Australian Securities and Investments Commission (ASIC) has recently discovered that the ASX-listed companies with heavy exposure to carbon have failed to upkeep with the required disclosure standards on carbon-related risks. As a result, the watchdog has recommended companies to adhere with the guidelines of Taskforce on Carbon-related Financial Risk Disclosure (TCFD).

The implementation of this global TCFD requires companies to evaluate the climate related financial risk in all feasible scenarios including the action required for Paris agreement to limit global temperature rise to 2 degree Celsius. The pact was signed by 24 countries including several large carbon emitters like China, India and Japan.

It has been predicted by the International Energy Agency (IEA) that coal demand, both for power generation and industrial activity, will continue to surge up until 2040 with South East Asia’s coal demand expected to more than double to 390 Mtce by 2040. This makes it roughly equivalent to current total annual coal exports in Australia. The anticipations were drawn on the basis of New Policies Scenario in World Energy Outlook 2017.

The growing demand in South East Asia has driven the company’s prospective to construct High-Efficiency Low-Emission (HELE) power stations that uses high quality coal which is high in energy and low in ash, sulphur and other impurities. Anyway, the building of HELE power stations are integral to meet Paris COP21 commitments which has led all the major Asian markets like Japan, Korea and Taiwan to initiate its construction with the aim to supply growing demand for electricity.

Let’s see how Whitehaven performed in FY18

As per the recently announced annual report for fiscal year 2018, there has been 30% improvement in the bottom line of the Whitehaven which takes group’s FY18 profit to $525.6 million from $405.4 million in FY17.

Looking beyond the headline profit figure, the company has shipped and marketed in excess of 20 million tonnes of coal, which led the company to achieve revenue of $2,257.4 million and underlying EBITDA earnings of $940.0 million compared to $1,773.2 million revenue and $714.2 million earnings in previous year, respectively. 

The shareholders have been entitled to receive 52.2 cents earnings per share which is 11.5 cents greater than previous announced EPS. Moreover, the dividend per share has just doubled from previous year as it has been increased to 40 cents per share in FY18 from 20 cents per share in FY17. The FY18 dividend and other returns to shareholders during this period brings the total annual shareholder cash return to $595.2 million for the year.

On the cash front, the group has generated $854.0 million from operations while at the end of the period to 30 June 2018 cash in hand of the company was $111.8 million.

The share price of Whitehaven Coal Limited has been seen bleeding today on ASX. As the stock has fallen by 1.767% to last trade at $5.560 on 8 October 2018. However, it has shown a decent performance over the past year, recording 63.95% increase. Most recently, WHC traded at a PE of 10.640 x with market capitalization of $5.81 billion.

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