Whitehaven Coal looks to attack debt levels in strong finish to financial year
Whitehaven Coal has flagged a strong finish to the financial year amid a strong recovery in global coal markets.
Whitehaven Coal has flagged a strong finish to the financial year amid a strong recovery in global coal markets, despite the ongoing impact of China’s bans on Australian coal.
The coalminer sank to a net loss of $94.5m for the first half of the financial year, compared with a profit of $27.4m in the same period a year earlier, and said it would not pay an interim dividend as it pushes to get debt levels under control.
Whitehaven’s net debt climbed $35.6m from the end of June to $823.1m, and managing director Paul Flynn told shareholders the company planned to attack its debt levels on the back of rising prices.
“We have closed out the first half of the financial year with strong levels of liquidity, strong banking support and we are focused on retiring debt against the backdrop of the improving price environment,” he said.
“With future savings targets identified and coal markets rebalancing in response to demand signals, we are optimistic about achieving stronger outcomes through the second half.”
Whitehaven’s revenue plunged 21 per cent compared to the same period in 2019 — when the company’s output was hit by bushfires and problems finding experienced staff for its flagship Maules Creek mine — as the pandemic hit demand for thermal coal and China’s bans on Australian exports pushed the coking coal price into freefall.
The company booked revenue of $699.3m for the half, down from $885.1m, and recorded a 79 per cent fall in earnings before interest, tax, depreciation and amortisation, to $37.2m.
“Even though Whitehaven does not have direct exposure to China, the Chinese import restrictions for Australian sourced coal does have an impact on the seaborne coal market,” the company said.
“China’s restrictions have altered seaborne coal trade flows where, instead of being delivered to China, Australian coal is now finding customers in alternate destinations including India, Pakistan and the Middle East, and traded coal historically delivered into these markets is finding its way into China.”
But a strong recovery in prices for both thermal and coking coal is expected to lift the company in the second half of the year, with demand recovering strongly in key markets such as India.
“Asian steelmaking output ex-China continues to improve as economic stimulus activity drives increased coal demand and consumption in Whitehaven’s key metallurgical coal markets of India, Japan, Korea, Vietnam and Taiwan,” Whitehaven said.
“Following India’s mid-year COVID-19 lockdown, demand has rebounded strongly and it continues to be a growing destination for Whitehaven’s metallurgical coal products.”
Whitehaven shares closed down 2c, or 1.3 per cent, on Wednesday, at $1.56.
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