Whitehaven Coal posts record profit, flags higher costs
* Net underlying profit for FY2019 at A$564.9 mln
* Company declares 2H19 div of A$0.30, FY div of A$0.50
* Rising costs may weigh on 2020 financials
(Adds analyst comment, detail, updates prices)
Aug 15 (Reuters) - Whitehaven Coal Ltd on Thursday
reported a record full-year 2019 underlying profit and a bumper
dividend that beat expectations, although analysts said an
oversupply of thermal coal could cause headwinds to future
Australia's biggest independent coal miner said net profit
after tax, before significant items, was A$564.9 million ($383
million) compared with A$524.5 million a year ago.
The company declared an second-half ordinary dividend of 13
Australian cents per share and a special dividend of 17
Australian cents per share, up from 20 Australian cents for the
first half of the year.
For the full year, the company will pay a dividend of 50
Australian cents per share, up from 27 Australian cents for the
"They slightly beat the market’s expectations on financials
and they well and truly beat expectations on the dividends which
is the real story about today," said analyst Tom Sartor at
"Look at the share price, look the coal price. We think
they’re cheap but look at what is happening to the thermal coal
market. It’s looks tough short term to build momentum."
Whitehaven shares were at A$3.35 a share on Thursday, down
4.01%, in line with declines in the overall Australian stock
market. The company's shares fell to a 22-month low last week of
Whitehaven has been increasing its output of higher quality
thermal coal for which prices have fallen less than lower
grades, partially offsetting a rise in costs and lower
production of saleable coal in the year.
Asian benchmark Newcastle thermal coal prices are down 44%
from last year's peak and are falling towards three-year lows,
partly as cheap natural gas displaces some coal in Asian
The company said it received an average of $100 a tonne for
its higher-grade thermal coal, up from $98 per tonne a year
Whitehaven, however, flagged higher costs for the coming
year. The company expects unit costs to rise about 4.5% to $70
per tonne in fiscal 2020 partly due to inflationary measures
including labour costs.
Higher diesel prices, increased washing to sell more higher
quality coal and lower output from the company's lower cost
mines were also adding to costs, Whitehaven said.
During a call on the earnings, Whitehaven Chief Executive
Officer Paul Flynn said a recent regulatory decision not
approving the extension of coal mine in New South Wales should
not have any ramifications on its approval of its Vickery
project in the state.
Flynn noted the mine in question was mothballed while
Whitehaven is an operating miner that is already employing
people and already paying taxes.
Flynn also said he said he remained confident of obtaining
debt financing for its planned expansions, even as banks and
insurance companies pull back from the sector.
"The composition of our insurance book does change from time
to time but our banking support has been strong and all
indications are that when we come to execute on Vickery and then
Winchester South soon, that we will have a very supportive
banking syndicate who will support as through that," he said.
($1 = 1.4743 Australian dollars)
(Reporting by Niyati Shetty in Bengaluru and Melanie Burton in
MELBOURNE; Editing by Shounak Dasgupta and Christian
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