Despite solid production and sales performance for the six months ending in June, Yancoal Australia (ASX:YAL) is facing a 25% revenue decline due to weaker global prices.
Although the coal miner anticipates a revenue slide of just over A$1 billion, it maintains its sales guidance for 2024 at 35 to 39 million tonnes.
In its June quarter and half-year report, issued late Thursday evening, the China-controlled Yancoal reported attributable sales increased from 14.4 million tonnes in the first half of 2023 to 16.9 million tonnes in the latest June half.
This growth followed a 9% rise in attributable production to 21.8 million tonnes from 20 million tonnes in the first half of 2023, despite the impact of wet weather, which again affected some of its mines in the six months to June.
However, Yancoal noted that the average price for its mostly thermal coal sales (with some sales of coking coal) fell to A$180 per tonne from A$278 per tonne in the first half of 2023.
As a result, revenue from coal sales is expected to be around A$3.04 billion for the six months to June this year, down from A$4.003 billion in the first half of 2023.
Even though the revenue decline is substantial, Yancoal stated that the A$180 per tonne price is roughly double its costs per tonne, indicating another half-year of cash accumulation.
"Largely as expected, the production rate in the first half sees us tracking at the low end of the full-year guidance range. However, as in 2023, production volumes are expected to increase in the second half," it said.
"The company retains a strong financial position, holding cash of A$1.55 billion at the end of June. This was after paying A$429 million for the fully franked 2023 final dividend (A$0.325/share) on April 30th.
"Like last quarter, thermal coal markets recorded increased export supply from Australia and Indonesia. Despite this, thermal coal markets appear relatively balanced. Coal indices varied week to week, but the average price remains well supported.
"We see Yancoal’s large-scale, low-cost coal production profile as well suited to the current coal market conditions. Having no interest-bearing loans, a large net cash position, and robust operating margins provides us with the capacity to pursue suitable growth opportunities as they arise,” the company added.
