Shares in NSW soft coking and thermal coal exporter Whitehaven Coal ended up 5% higher at $3.83 yesterday after the market took its 2018-19 June quarter and full year report to be good news.
But given the slide in thermal coal prices and a dip in coal sales over the financial year, the market support could be brief as investors realise the weakness in global prices in the year to June will make it harder for the company to achieve a significant rise in earnings.
The company said it received higher than expected prices for its thermal coal in the June quarter, softening the blow from lower than forecast sales volumes.
The thermal and soft coking coal exporter said in its June quarter production report that it received an average of $US84 for each tonne of thermal coal sold over the past three months.
That was about 5% better than the benchmark price for New South Wales thermal coal for the quarter.
But the Newcastle Index thermal coal price weakened to an average of $US79.86 a tonne for the June quarter compared with the average price for 2018-19 of US$99.41 a tonne.
The soft coking coal price was also down over the year.
Whitehaven said total coal sales for 2018-19 were 21.6 million tonnes (Mt) over the 12 months, which was around 2% lower than sales in 2017-18.
So earnings for the full year will be under pressure from the lower sales and weaker prices, especially for thermal (steaming) type coals.
Whitehaven said it had a strong end to 2018-19, boosting production from its NSW mines 25% to 7.3 million tonnes (Mt).
That saw total production of 23.2Mt in FY 208-19, which was up 1% year on year increase and exceeded the company’s full-year guidance.
The improvement was driven by record production from the Maules Creek operation where 11.7 Mt was produced.
This was supported by a strong final quarter at the Narrabri operation which saw production of 1.9Mt and 6.4Mt for the full year.
Whitehaven Coal also reported a 9% increase in June quarter saleable coal production to 5.2Mt.
In the production report Whitehaven CEO, Paul Flynn, was pleased with the final quarter.
He said: “It’s pleasing to see a respectable production result for the quarter and year, particularly in respect of Narrabri which demonstrated a strong return to form. Safety performance was also positive and we are absolutely focused on ensuring continued vigilance on this front.
“We also progressed along the approvals pathways for both Vickery and Winchester South, together with developments at our existing assets.”
Whitehaven shares are down 32% over the past year, reflecting the weakness in global coal prices.