The fading fortunes of the Australian coal industry were underlined Wednesday when major NSW exporter, Whitehaven reported a big loss and withheld their dividend.
Whitehaven revealed a deeper-than-expected half-yearly loss as the COVID-19 pandemic thanks to the pandemic and the impact of Chinese government import bans which sent thermal coal price lower for most of the half, only steadying in the final six weeks because of a harsh winter in northern Asia.
Whitehaven reported a $94.5 million loss for the six months to December 31, down from a $27 million profit one year earlier.
The loss was deeper than the $73 million loss analysts had forecast.
Whitehaven’s shares fell more than 9% to a low for the day of $1.40 before rebounding to be down just 1.2% at $1.565. That rebound was more a dead cat bounce as the outlook for coal and Whitehaven is not promising.
“The impacts of subdued pricing on seaborne coal markets were a key feature of first-half results as COVID-19 impacts on economic and industrial activity continued to be felt,” Whitehaven chief executive Paul Flynn said.
“With future savings targets identified and coal markets rebalancing in response to demand signals we are optimistic about achieving stronger outcomes through the second half.”
While Whitehaven does not have direct exposure to China, it too was affected by Beijing’s decision to ban Australian-sourced coal because the decision weighed on prices.
“Instead of being delivered to China, Australian coal is now finding customers in alternate destinations including India, Pakistan and the Middle East, and traded coal historically delivered into these markets is finding its way into China,” the company said, echoing comments it made in the December quarter and half production and sales report earlier in the month.
There’s no interim dividend after the company paid a small 1.5 cents a share for the December, 2019 half year.
