Why the Whitehaven share price has plunged 11% today

The Whitehaven Coal Ltd (ASX:WHC) share price has plunged more than 11% in early trade, after the coal miner revised FY20 guidance.

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The Whitehaven Coal Ltd (ASX: WHC) share price has plunged 11.17% in morning trade. The coal miner released an announcement this morning that provided an update on the company's FY20 guidance.

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What did Whitehaven announce?

Earlier this morning, Whitehaven Coal released an announcement to the market providing an update on the company's FY20 guidance. In the announcement, Whitehaven warned that full year guidance would be impacted by skill shortages and inclement weather.

According to Whitehaven, the company has struggled to hire experienced staff for its largest operation at Maules Creek. The challenging regional and local labour market has impacted the company's ability to fill rosters, resulting in unanticipated productivity losses. Whitehaven expects that it will take until the end of the year to hire the necessary skilled labour and return to full utilisation of equipment and increase operating productivity. The company is currently working with employment services to reach a solution.

In addition, Whitehaven also cited unanticipated productivity losses due to adverse weather conditions across North West NSW. The company announced that production at Maules Creek had been further interrupted by numerous, unscheduled production stoppages. Due to safety considerations, smoke, dust and haze events from ongoing drought conditions and fires have resulted in numerous work stoppages.

How will this impact Whitehaven's bottom line?

The shortfall in experienced labour and adverse weather have resulted in unanticipated productivity losses, impacting the company's bottom line. As a result, Whitehaven has revised managed coal sales for FY20 from 21Mt to a range between 19Mt and 20Mt.

In addition, coal production targets have also been lowered from between 22Mt and 23.5Mt to a new range of 20Mt to 22Mt. The revised guidance has also factored in further disruptions that could happen in the summer months.  

How has Whitehaven performed this year?

As Australia's leading producer of premium thermal coal, FY19 saw Whitehaven report a 10% increase in sales revenue from the prior year of $2,487.9 million. The company also saw a record net profit after tax of $564.9 million for the year and 3% increase in underlying earnings before interest, tax, depreciation and amortisation of $1,041.7 million.

Whitehaven's solid result was fuelled by a record production of 23.2Mt of run of mine coal and the rising unit price of coal. As a result, the company declared a dividend of 30 cents per share, which included an unfranked special dividend of 17 cents.   

The Whitehaven share price is currently trading at $2.66, down more than 11% for the day. Fellow coal miner New Hope Corporation Limited (ASX: NHC) is down 1.46% at the time of writing. 

Motley Fool contributor Nikhil Gangaram 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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