Coal shares have been declining because of soft economic activity and lower gas prices. However, with resilient demand from Asia, Whitehaven Coal Shares are likely to resurge in short term.
Whitehaven operates from a well-established base, featuring two strong coal production assets that contribute to stable and consistent revenue growth.
Whitehaven Coal Limited (ASX: WHC) delivered financial performance with total revenue reaching $3.8 billion, including $869 million from Queensland operations in the fourth quarter. The company reported an underlying EBITDA of $1.4 billion, with $272 million of this coming from Queensland in Q4. Underlying NPAT amounted to $740 million, while the statutory NPAT, after accounting for non-recurring costs, stood at $355 million. WHC also declared a fully franked final dividend of 13.0 cents per share.
On the operational side, WHC achieved a total Run-of-Mine (ROM) production of 24.5 million tonnes, which includes 4.8 million tonnes from Queensland in Q4, marking a 34% increase compared to fiscal year 2023. The average realised price was A$217 per tonne for New South Wales and A$271 per tonne for Queensland in Q4. The cost of production was A$114 per tonne in New South Wales and A$120 per tonne overall, incorporating Queensland costs in Q4. WHC with available liquidity of $556m at year end includes cash on hand of $405m and a US$100m undrawn revolving credit facility.
Global production of metallurgical coal, especially high-quality hard coking coal (HCC) from Australia, is expected to fall short due to long-term production issues. Combined with rising demand from India, this will likely push up metallurgical coal prices both now and in the future. Whitehaven Coal’s strong position in this market should benefit from these supply constraints. Although prices for some types of metallurgical coal, like PCI and SSCC, are currently lower compared to HCC than in the past, prices for low-vol PCI are improving and overall prices are favorable.
Demand for high-calorific value (CV) thermal coal remains strong in Whitehaven’s key Asian markets for efficient power generation and industrial use. The supply gap for high CV thermal coal is widening due to a lack of new investments and the depletion of existing sources, which should support higher prices in the medium to long term. Recently, Whitehaven executed binding agreements with Nippon Steel and JFE Steel for the sale of 30% of Blackwater. This deal will boost company balance sheet and provide more financial flexibility in the future.
Whitehaven foresees a substantial recovery in metallurgical coal prices in both the short and long term due to an anticipated deficit in global metallurgical coal production and robust demand from neighbouring markets like India. Furthermore, the company is making strides with its Narrabri Underground Mine Stage 3 Project, which has the potential to prolong the project's mine life from 2031 to 2044, underscoring promising operational sustainability initiatives and enhancing future production levels.
Source: Company’s Report
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