Despite claiming the most profitable six months in its history and a one-third lift in interim dividend, investors yesterday sold off shares in coal miner New Hope Corp.
The shares fell nearly 12% to $3.89 yesterday after New Hope reported a 4% rise in its half-year net profit thanks to a 21% jump in revenues to more than $616 million from higher production and prices.
Net profit for the six months to January 31 came in at $120.2 million, compared with $115.6 million in the year-earlier period, New Hope said on Tuesday.
The company had incurred one-time expenses over the past six months from its acquisition of further holdings in the Bengalla coal mine, of which it now owns about 80%.
Barring these one-off expenses, New Hope’s net profit rose 33% to $159.8 million (from $120 million previously) in the half and the interim dividend was lifted 2 cents a share to 8 cents.
CEO Shane Stephan, said, “This strong result is due to a number of factors, not the least being the Company’s increased stake in the Bengalla coal mine.” (In the Hunter Valley region of NSW)
“The acquisition of an additional 30% interest in Bengalla has brought our ownership to 70%. That will rise to 80% after New Hope buys Japanese trading house, Mitsui out of the mine. The only other shareholder will be Taipower (of Taiwan) with 20%.
Increased production at Bengalla saw the mine deliver a pre-tax net profit of $126.6 million for the half. Queensland mining operations earned a pre-tax profit of $110.9 million, ensuring a record first-half result for the Company.”
“Coal production at Bengalla (on an equity share basis) was 2.4 million tonnes, 23% above the PCP in 2018.” (Coal sold for the half year ended January 2019 totaled 4.496 million tonnes (QLD: 2.142 million NSW: 2.354 million)
Mr. Stephan said the increased share in Bengalla and a five-year debt financing package will deliver certainty of funding to underpin the Group’s growth initiatives over the medium term whilst maintaining a conservatively geared balance sheet.
“However we will continue our careful cost management overcoming periods as improving commodity prices start to impact across the industry on the cost of both labour and materials,” he said in yesterday’s statement.
“The Company’s commitment to maintaining long term relationships with suppliers is providing a strong competitive advantage as surplus capacity in these markets is consumed.
“To ensure uninterrupted supply to our many international and domestic customers, we need to secure the necessary approvals for the continuation of the New Acland Mine.
“The Queensland Land Court decision to recommend the approval of Stage 3 and subsequent decision by the Department of Environment and Science to grant the application to amend the Environmental Authority is welcomed.
However, we have a number of other steps to go through before the future of the mine is secured.
“Our focus for the future remains on safe and efficient production at existing operations, enabling commencement of mining operations at the Lenton Joint Venture Burton Mine and extending the life of operations at New Acland.” Mr. Stephan added.
