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New Hope (ASX:NHC) share price sinks lower on FY 2020 results

The New Hope Corporation Limited (ASX: NHC) share price is tumbling lower on Tuesday following the release of its full year results.

At the time of writing the coal miner’s shares are down over 4% to $1.19.

How did New Hope perform in FY 2020?

For the 12 months ended July 31, New Hope delivered a 4% increase in coal production to 11.3 million tonnes (MT) and a 6% lift in sales volumes to 11.5MT.

This was driven by increases in production and sales by the company’s Bengalla operation which offset softer production at New Acland.

However, due to a sharp reduction in coal prices, New Hope’s growth stopped there.

Revenue fell 17% over the 12 months to $1,084 million and earnings before interest, tax, depreciation and amortisation (EBITDA) crashed 44% to $290 million.

This ultimately led to New Hope’s profit after tax tumbling 69% to $120 million or 10 cents per share.

In light of this poor financial performance, the company has reduced its dividend by 65% to 6 cents per share.

A year like no other.

The company’s Chair, Robert Millner, notes that FY 2020 was a unique year and one filled with challenges.

He commented: “The 2020 financial year has been like no other year in the Company’s history and has presented the Board and management with a number of challenges. The Company has weathered many coal pricing cycles in its long history, but never one driven by such a unique set of circumstances; a pandemic and increasing tension with Australia’s major trading partner.”

Positively, the chairman is optimistic that things will improve and notes that the company is “beginning to see some signs on the supply and demand sides that should help to stabilise coal prices.”

Outlook.

Mr Milner advised that while trading conditions remain uncertain because of the pandemic, the company is prepared for whatever is thrown at it.

He commented: “Looking forward, COVID-19 will continue to affect energy demand in the Company’s markets and alter the balance of the energy mix. New Hope will continue to monitor developments and fine-tune its strategy accordingly.”

Management added: “With a suite of low cost, quality assets and strong balance sheet, the Company remains well positioned to endure the current global economic downturn and retain its position as one of Australia’s leading coal producers.”

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