New Hope Corp has joined coal exporting rivals like Yancoal Australia and Whitehaven in confirming how it rode the spillover from Russia’s invasion of Ukraine in late February to record revenue, profit and returns to shareholders for the year to July 31.
New Hope is controlled by Washington H Soul Pattinson and its offshoot Brickworks, and its surge in earnings and dividends in particular will boost the annual accounts for both big shareholders when they report their 2021-22 on Wednesday morning.
The New Hope share price rocketed on Tuesday to a high of $5.98 before closing at $5.94, a gain of 8.8% on the day.
The higher price came on the back of the company’s full year earnings which saw New Hope report a 143% lift in revenue and 1,138% surge in net profits and declare 56 cents in final dividends to be handed out in November.
Revenue for the year totalled $2.55 billion, net profit after tax was $983 million ($1.4 billion on an EBITDA basis), net cash $1.14 billion and a fully franked final dividend of 31 cents a share and a special one-off payment of 25 cents a share.
Combined, the two dividends represent a whopping 700% year-over-year increase from last year’s 7 cent final dividend.
New Hope paid an interim of 30 cents a share (17 cents ordinary and a 13 cents per share one off special), meaning a total payout to shareholders for the year of 86 cents a share.
Coal prices surged because of the Russian invasion of Ukraine in February and drove the surge in revenue, especially in the six months to July 31.
New Hope said it sold 8.832 million tonnes of coal in 2021-22, down from 10.035 million tonnes because of production and shipment problems caused by the rain and flooding earlier this year.
The average price for 2021-22 was $A281.84 a tonne more than double the $A101.36 a tonne for 2020-21. In the final quarter, New Hope said its average price was $A493.52.
With net cash flow of more than $1 billion, New Hope also paid off its debt facility in full. It ended the period with $715 million of cash in hand.
New Hope spent $94.4 million in July (near balance date) buying a 15% in Malabar Resources which owns an underground coking coal mine in the Hunter Valley.
New Hope didn’t provide any new earnings guidance for 2022-23 except to say that expects coal prices to remain elevated for the coming 12 months. (The Newcastle thermal coal index price is well above $US300 a tonne out until 2027 at the moment!)
It did say it is looking to add production from its New Acland project in southern Queensland to its portfolio in the coming 12 months, subject to final approvals.
It’s also aiming to capitalise on the high-price environment, helped by its investment in Malabar Resources and increased production at Bengalla in the Upper Hunter Valley and 80% owned.
It has also committed to work within government policy through the transition to renewable energy, claiming its high quality, low emission thermal coal is “critical” in supporting the decarbonisation movement.
And in what will interest investors most of all, New Hope directors said the company is looking at options to return a portion of its surplus capital to shareholders. Some methods it’s considering include mergers and acquisitions, share buybacks dividends (which was done in the year to July 31) or capital returns.
The impact of the higher coal prices on new Hope’s finances has been well known now for months, but the ‘new’ news yesterday was the consideration of extra returns to shareholders which will benefit Soul Patts in particular.
