However for TPG stablemate, New Hope Group (NHC) (both companies are dominated by the Washington H. Soul Patts/Brickworks group of Sydney) the first half of 2014-15 was a very different experience with weak demand for coal, write-downs and an indifferent operating performance.
But directors remain confident, an interim dividend has been declared (though it’s lower), and the company has more than a billion dollars to spend on new investments, if it can find value.
The company downgraded its guidance in late February.
New Hope Coal recorded a first-half net loss, including one-off items, of $23.1 million, after falling oil prices forced the Queensland miner to write-down its oil and gas assets.
Excluding the one-offs earnings jumped 51%, or $34.2 million, on the back of higher production and the weaker Aussie dollar. The main factor behind the loss was $69 million in write-downs of coal assets and oil and gas investments.
New Hope expects coal and oil markets to remain challenging in the second half, and says full-year coal production is expected to be roughly flat on-year after an expected dip in coming months.
An interim dividend of 4¢ has been declared, down 33% from the 6c a share paid in the first half of 2013-14.
NHC 1Y – Cashed up New Hope posts first-half loss
"The outlook for global coal markets remains challenging, although positive signs are beginning to appear in some markets," it said. "Prices [received] in the second half . . . will be lower in US dollar terms, although that will be partially offset by a weaker Australian dollar."
“We’re targeting growth in coal,” New Hope managing director Shane Stephan told the media yesterday.
”We’re seeking to grow in Australia, focused on asset-level opportunities, and diversify by port and product. We would look at metallurgical coal."
New Hope produces thermal coal, which is used mostly to generate electricity and used in the cement industry, while metallurgical coal, which is also known as coking coal, is mainly used to make steel.
The Queensland-based miner is progressing development approvals for the New Acland mine, which is intended to extend the existing mine that will be exhausted by 2017.
It had also bought coal tenements in the Surat Basin from both Cockatoo Coal and Mitsui & Co, which are development candidates over the next five to seven years.
New Hope shares rose 2.4% to $2.54.
