Whitehaven Coal (ASX:WHC) was somewhat reserved regarding the movement in major financial metrics in its December half-year results press release, issued Thursday morning. The page listed revenue, dividend, and earnings figures, alongside commentary on the company's performance and its significant venture into coking coal in Queensland through the acquisition of two mines, Daunia and Blackwater, not desired by BHP and Mitsubishi.
However, it wasn't until the third page of the release that the impact of the 2023 slump in global coal prices was revealed, stemming from Russia's invasion of Ukraine. This slump persists in the current half-year.
Revenue plummeted by 58% to $1.581 billion from $3.809 billion in the year-ago December 2022 half-year. Underlying EBITDA dropped by 79% to $672.8 million, and underlying net profit decreased by 79% to $372.3 million. Cash generated in the half, a crucial metric for all companies, and extensively utilized by Whitehaven, dwindled to $532.2 million from approximately $2.553 billion.
The interim dividend of 7 cents per share marked a decrease from 32 cents per share a year earlier.
Despite these weakened results, improved production and sales performances were noted in the half-year, with most of the wet weather and flooding from 2022 abating. Run-of-mine production rose to 10.3 million tonnes from 8.8 million a year ago, and sales also increased to 8.8 million tonnes from 8.4 million tonnes on a Whitehaven-managed basis.
The decision to expense a total of $163 million of transaction and foreign exchange costs and losses on a deposit and other early financing of the Daunia and Blackwater purchase was deemed sensible.
CEO Paul Flynn expressed a balanced perspective, highlighting resilience in thermal coal prices, operational consistency, and ongoing integration efforts for the acquired mines.
Looking ahead, the focus shifts to integrating the new mines and debt management, signaling lowered dividend payments where possible. The outlook for the coming periods emphasizes meeting production and sales targets, with a cautious approach to capital management.
The completion of the acquisition of Daunia and Blackwater mines remains a key focus, with the majority of employees preparing for integration into Whitehaven's operations upon transaction closure. The company intends to prudently manage capital and maintain its targeted payout ratio while directing cash flows from the acquired business towards retiring vendor finance.
The share buyback will remain paused, with a decision regarding its resumption to be made by the Board at the appropriate time.
