By Melanie Burton and Jaskiran Singh
MELBOURNE (Reuters) – Australia’s Whitehaven Coal Ltd posted a more than five-fold jump in first-half profit on Thursday, aided by soaring coal prices, but paid a lower than expected dividend, sending its shares down.
The company posted a net profit after tax attributable of A$1.78 billion ($1.23 billion) for the six months ended Dec. 31, compared with A$340.5 million a year earlier.
Cashed up coal miners found eager interest from investors when prices surged towards records last year after major coal exporter Russia’s invasion of Ukraine upended supply chains and lead to a scramble for alternatives to Russian coal and gas.
Australia’s biggest independent coal miner said it achieved average coal price of A$552 per tonne in the first half of 2023, compared with A$202 per tonne a year earlier.
But Whitehaven announced an interim dividend of only 32 Australian cents per share, about 30% lower than Citi estimates and about 16 cents below Goldman Sachs’ forecast. The company declared an interim dividend of 8 Australian cents last year.
Whitehaven has retained around A$880 million in unallocated cash on hand which it was holding onto for growth and to make sure it could manage a higher final dividend given a drop coal prices this year, Chief Executive Paul Flynn said on an earnings call.
“It has traditionally skewed the dividend to the second half, and maybe that will also be true this time, given that they have A$800 million in net cash on the balance sheet,” analysts at Sydney-based investment bank Barrenjoey said in a research note.
Also pressuring shares was an announcement from Whitehaven clarifying their obligations under a directive from Australia’s New South Wales state to set aside some output for local power plants to lower energy costs.
Whitehaven shares slid as much as 12.3% after news of the coal reservation scheme broke, before paring loses to A$7.88, down 3.8%.
GROWTH PROJECTS
Part of Whitehaven’s growth plans include development of its planned Vickery coal mine in NSW.
“We are looking at the staged introduction of our Vickery project. Of course that’s a large scale project that has a significant commitment of capital, although the board has yet to approve it,” Whitehaven’s Flynn said.
Vickery been protested on climate change grounds but is set to produce 10 million tonnes of thermal coal if it meets regulatory approvals for an investment decision in 2024.
“We do think the structural underpinnings of the market are very positive, but in the short term, coal prices have come off quite a bit,” Flynn added.
Whitehaven, which has been at the mercy of heavy rains over the half from the La Niña weather phenomenon, said weather conditions were expected to improve this year, but added that labour constraints were still ongoing.
Subsequently, the company kept its run-of-mine coal production guidance of between 19.0 million and 20.4 million tonnes for the 2023 fiscal year unchanged.
($1 = 1.4484 Australian dollars)
(Reporting by Jaskiran Singh and Ayushman Ojha in Bengaluru and Melanie Burton in Melbourne; Editing by Shinjini Ganguli, Subhranshu Sahu)