Coal price slams Whitehaven profit

Whitehaven’s first half net profit has tumbled 91pc, largely because of the crumbling thermal coal price.

Whitehaven’s Maules Creek mine.

Whitehaven Coal boss Paul Flynn says the company had no trouble refinancing a $1bn finance facility, despite ongoing pressure from activists on Australian banks to ditch thermal coal producers.

Profits at the coal miner slumped in the face of the crumbling thermal coal price in the first half of the financial year, with the net profit down 91 per cent to $27.4m.

But Mr Flynn told reporters a recent refinancing of its $1bn revolving credit facility was oversubscribed by a syndicate of Australian and international banks, although he conceded it was becoming easier to find cash for coal from Japanese and Chinese lenders than Australian banks.

“The markets that are vibrant and committed users of the type of products that we sell, understand our business well. And so the banking proposition is easily made into those markets,” he said.

“We don’t sell coal here domestically, we’re an exporter. So we find symmetry in being funded by the markets that use our products. That’s the biggest driver for that change over the last two or three terms of our facility.”

Drought, bushfires and the Whitehaven’s inability to recruit skilled workers at its Maules Creek mine also combined to the profit slump as production and revenue both fell 30 per cent compared to the first half of the previous financial year.

Whitehaven booked revenue of $885.1m for the period, down 30 per cent, as it received an average $108 a tonne from its suite of products, down from $155/t in the previous comparable period.

But earnings before interest, tax, depreciation and amortisation tumbled 68 per cent to $177.3m because of the price shortfall and lower Maules Creek production on the back of NSW bushfires and drought, and labour shortages at the mine.

Whitehaven declared a 1.5c interim dividend, compared to 20c at the same time year ago.

Mr Flynn said the coronavirus caused a temporary downturn in demand for coal in China, but that had been balanced by an equivalent loss in domestic production in China.

Whitehaven said on Thursday coal prices had strengthened in the wake of the impact of the virus, as the loss of Chinese coal mines pushed up domestic prices and the demand for seaborne product.

Low gas prices remain a threat, the company said, and still provide an incentive for power stations to switch from thermal coal to gas if it is technically feasible.

Whitehaven maintained its revised production guidance for the remainder of the financial year, of 19 to 20 million tonnes of coal sold, at an average unit production cost of $73 to $75 a tonne.

Mr Flynn said recent rain in NSW had removed the threat that water shortages could force further curtailment of production at Maules Creek, and the company’s plans to fix labour shortage issues remained on track.

Whitehaven shares fell 13c, or 5.5 per cent, to close at $2.23 on Thursday.