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Why the Whitehaven Coal share price is sinking today

The Whitehaven Coal (ASX: WHC) share price is down 8% today after the coal miner reported its results for the six-month period ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding period.

  • Sales revenue of $1,270 million, up 11%
  • Net profit of $305.8 million, up 19%
  • Underlying EBITDA before significant items of $550.8 million, up 12%
  • Cash from operations of $463.8 million, up 5%
  • Net debt reduced to $244.2 million, at 31 December
  • Unfranked interim dividend of 20 cents per share, including 5 cents per share special dividend
  • Guidance for FY 2019 coal production between 21.5 million to 22.5 million tonnes
  • Cost guidance for the full year increased to $67 per tonne from $64 per tonne

The Whitehaven share price may be slipping on the back of the guidance for increased operating costs, although Whitehaven’s overall fortune remains leveraged to the direction of the coal price.

The stock has more than doubled over the past 4 years on the back of a surging coal price and naturally the miner is bullish on future demand for the commodity that’s commonly needed for power generation in large emerging markets such as China and India.

For potential investors then there’s plenty of research to be done on the company and underlying assumptions to be made on the medium-term outlook for coal prices. Another coal miner in South32 Ltd (ASX: S32) also recently reported a strong result for investors to consider.

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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