Whitehaven Coal’s strong performance in the June 30 year on the back of coal’s return to favour has been known for a month since the company all but laid out the result in its production and sales update in late July.
Yesterday it delivered on that promise, while also providing more financial details on dividend and earnings and a very upbeat outlook for the 2023.
Whitehaven reported a record net profit after tax of nearly $2 billion for the June 30 year after EBITDA of 2022 of $3.1 billion, which was nearly 15 times the size of the $204.5 million reported for 2020-21.
Revenue hit a record $4.9 billion, thanks to a record average coal price of $A325 a tonne in 2021-22 compared with $1.56 billion revenue and $A95 a tonne average price in 2020-21.
Thermal coal prices, Whitehaven’s main product, have been well above $US440 a tonne for most of the past six weeks. That’s getting more than $A600 a tonne on current exchange rates futures prices
Shareholders have been rewarded with a fully franked final dividend of 40 cents a share, taking the full year dividend to 48 cents a share.
Whitehaven said that after announcing a 10% on-market share buy-back in February, 76.37 million shares (or ~7% of issued share capital) were bought back in up to June 30 at an average price of $4.75 and a total investment of $362.6 million.
The company said that in the six months to December, 2022 it aims to complete the buy-back within the previously announced cap of $550 million.
“The Board will seek shareholder approval to increase its share buy-back programme at the Company’s Annual General Meeting in October.
“The aggregate of the interim and final dividends totalling $449 million and the $550 million buy-back represents a total payout ratio of 51% 2022 after tax net profit
CEO Paul Flynn said in Thursday’s statement:
“Coal prices are at record levels and customers are focused on energy security now more than ever before.
“We have worked hard to position ourselves to maximise the opportunity arising from historically high prices. We achieved a record realised average price of A$325 a tonne in FY22, compared with A$95a tonne in the prior year.
“Despite COVID related absences, labour constraints and weather interruptions, our team delivered solid operational and product quality improvements in FY22.
“With strong cash flows expected to continue, we will use capital to maintain and optimise our existing operations, retain cash on the balance sheet for future optionality, and return surplus capital to shareholders through franked dividends and share buy-backs,” he said.
Looking to the 2022-23 financial year Mr Flynn the company expects demand for high-quality seaborne thermal coal is expected to remain strong throughout FY23 and high-CV coal prices should continue to be well supported.
“We expect to deliver higher ROM production and coal sales in FY23 compared with FY22, and we are focused on maximising margins including managing inflationary cost pressures.
“We will also continue to progress and refine plans for our Vickery and Winchester South development projects in FY23 to position the company to bring on additional capacity if the Board determines appropriate returns can be delivered.”
He said energy security is expected to remain a key priority while there is a continuing global energy supply shortfall – particularly for high quality thermal coal.
“It is likely to take several years before additional supply or alternative energy sources are available to rebalance global supply and demand dynamics.
“In the near term, thermal coal prices are expected to remain elevated as a result of the incoming sanctions on Russian coal into Europe and supply side disruptions arising from heavy rainfall in the Hunter Valley in early July.
In metallurgical markets, while pricing is strong compared to historical levels, further volatility is expected due to global economic pressures in the near term.
“While longer-term, there is a positive demand outlook for metallurgical coal and underlying prices, in the near term we will continue to leverage opportunities to maximise volumes of higher priced thermal coal sales,” Mr Flynn said.
