The annual results for coal miner, New Hope Corporation might have been a record, but the detail left investors unimpressed.
Thanks to the extra tonnage from a higher stake in the Bengalla thermal coal mine in the NSW Hunter Valley, revenue for the year to the end of July jumped 21% to $1.306 billion, an all-time high.
But while net profit after one-off items rose 41% to $211 million (because of write-downs in 2017-18), net profit after tax before one-off items was only up 3% at $268 million.
And profit before tax and one-off items was also up 3% at $384 million.
That means much of the extra tonnage the company was entitled to from the Higher stake in the Bengalla mine (bought from Wesfarmers) was barely profitable.
But despite the marginal improvement in earnings, shareholders will benefit from a higher final and full-year payout.
The New Hope board have declared a fully franked final dividend of 9.0 cents per share, up 13% on the 8.0 cents a share final dividend paid last year. This takes full year dividends to 17.0 cents a share, up 21% on 2018.
The major beneficiary of the higher payout will be the 50% owner of the company, Washington H. Soul Pattinson.
Despite that news, the market sent the shares down 2.4% to $2.45 yesterday.
New Hope CEO, Shane Stephan said in yesterday’s statement the result for 2019 was outstanding given the Company is yet to have a full year trading under the new Bengalla Joint Venture arrangement.
“The acquisition of an additional 40% stake in Bengalla during the 2019 financial year, combined with an increase in Bengalla’s production rate to 10 million tonnes per annum, provides an enlarged profitable and sustainable asset base for the group,” he said.
Mr. Stephan said the Company had proven that, through strong financial management, strategic acquisitions and investments and a focus on low-cost operations, it was able to continue to generate sustainable long term returns for shareholders.
The New Acland Coal Mine Stage 3 Project continues to be in abeyance as the Company waits for final approvals. Despite being granted its Environmental Authority in March 2019, the project still requires Mining Leases and Associated Water Licence.
“As a result of further delays in receiving these approvals since year-end, the Company is making up to 150 workers redundant at the New Acland Coal Mine.
“The Company remains focused on securing all necessary approvals for Acland Stage 3 to target continuity of operations and employment for the workforce and contractors who rely upon the operation to support their families.
“Work will continue on the Company’s development assets at Burton, Lenton, and the North Surat, with the Burton coking coal project being the most prospective short term development opportunity. Final approvals will be sought for the Lenton project, with exploration and feasibility planning ongoing for the North Surat group of projects.
“Coal markets have been and are likely to remain volatile in the near term however demand for high-quality thermal coal remains strong across Asia.
“For most Asian countries thermal coal will continue to be a significant component of their energy mix for many years to come, underpinned by continued investment in new coal-fired power stations,“ he added.