Coal miner New Hope Group (NHC), part of the Brickworks-Soul Patts group, is hunkering down after a weak trading performance in the six months to the end of January, cutting dividend in half and warning of the “continuing challenges" for local coal companies.
Profit slid to $15 million in the six months to the end of January well below the $34.2 million profit from a year earlier.
After-tax profit for the six months to January was $2.7 million from the prior interim loss of $23.1 million (after one-off items).
Revenue fell 15% to $229.4 million from $269.1 million.
Earnings a share slid to 1.8 cents a share from 4.1 cents, although after taking into account one-off items it stood at 0.3 of a cent, up from a loss a share of 0.8 cents a year earlier.
The interim dividend has been halved to 2 cents a share from 4 cents as New Hope seeks to conserve cash (it’s not covered by earnings in the half).
NHC 1Y – Bleak outlook for New Hope
New Hope said in yesterday’s announcement that it is seeing some signs of stability and recovery in the Asian coal market, but management cautioned against reading too much into that.
"This is a time of continuing challenges for Australian coal producers," managing director Shane Stephan said in the statement.
He said the outlook for the Asian seaborne thermal coal markets was starting to show signs of stabilising after a period of weakness driven by the continuing slide in Chinese imports (which shows no sign of halting).
New Hope said the thermal coal spot market prices have been relatively stable in Australian dollar terms in the January quarter, but the outlook for thermal coal prices remains clouded, meaning producers and exporters are having to to continue to clamp down on costs and maximise cash flow.
Coal was a minor earner in the latest half. New Hope said the bulk of its earnings came from investments, which contributed $15.17 million before tax, while the coal, oil and gas units earned just $4.5 million.
In the six months to the end of January, coal production fell 12% to 2.5 million tonnes, due largely to poor weather, with sales declining by the same amount to 2.7 million tonnes.
In late 2015, New Hope agreed to buy a 40% interest in the Bengalla coal mine from Rio Tinto for $865 million. When it last ruled off its books, it had $1 billion in cash, which will be largely consumed by the Bengalla acquisition which was completed last week.
Analysts say they expect the company to earn a full-year net profit of about $69 million.
New Hope shares rose 0.8% to $1.24 yesterday, about where they were nearly nine years ago.
