NSW steaming coal miner and exporter, Whitehaven has slashed it’s interim dividend, triggering a sell-off in the shares to levels not seen since 2016 after reporting a very weak interim result.
Directors set the half-year payout at 1.5 cents a share, a fraction of the 20 cents a share payout a year earlier.
CEO Paul Flynn said in yesterday’s statement: “The payment of a modest dividend reflects our confidence in the fundamentals of the business and the prospects of a stronger second half.”
But it is also a recognition that the thermal coal market is weak and the coronavirus crisis won’t make it any stronger in the coming months, especially if the Chinese economy slows.
The company reported that revenue slumped 30% to $885.1 million, the previous corresponding December 2018 period.
Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) slumped by 68% to $177.3 due to “the softening of achieved prices and the impact on run of mine production of previously reported labour shortages and dust events at our largest mine, Maules Creek, and the scheduled eight weeks Narrabri mine longwall move,” directors explained in Thursday’s statement.
Whitehaven’s statutory after-tax profit for the half slumped 91% to $27.4 million.
Directors reaffirmed the lowered full-year guidance given in December’s downgrade.
WHC shares ended down 5.5% to $2.23 having fallen to $2.14 earlier in the session.
The first half result has been impacted by a softening of the Newcastle Index thermal coal price. More subdued pricing, in combination with a number of transient production challenges and higher unit costs, has given rise to a more testing first half.
“The successful refinancing is a strong endorsement of Whitehaven’s medium to long term growth profile and the cash flow generation potential of our quality assets.”
