Whitehaven (ASX:WHC) share price sinks on falling FY21 revenues

The ASX 200 coal miner delivered its FY21 results this morning.

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The Whitehaven Coal Ltd (ASX: WHC) share price is sinking in early trade, down 3.4% to $2.15 per share.

Below, we take a look at the ASX coal miner’s financial results for the year ending 30 June (FY21).

Whitehaven share price falls on FY21 results

  • Revenue of $1.56 billion, down from $1.72 billion in FY20
  • Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $204.5 million, down 33% year-on-year
  • Operating cash flows of $138.8 million, a decrease of 5%
  • Net loss after tax before significant items of $87.3 million, compared to a net profit after tax (NPAT) of $30.0 million in FY20

What happened during the reporting period for Whitehaven?

During the financial year, significant expenses for Whitehaven totalled $650 million, primarily related to asset impairments at its coal mines. FY20 saw no significant expenses.

Addressing the $87 million net loss before significant items – compared to the $30 million net profit the prior year – Whitehaven said its EBITDA margin on sales of produced coal decreased from $21 per tonne in FY20 to $14/t in FY21. The averaged realised price also fell by $9/t to $95/t in FY21. That was largely due to a strengthening Aussie dollar against the greenback.

The 14.4Mt of coal sales during the year were “broadly in line” with the prior year, but fell short of expectations.

Coal stocks of 2.3Mt were 17% above FY20 levels.

As at 30 June, the company had a net debt position of $808.5 million. It reported that it “holds a strong capital base to maintain investor, creditor and debt market confidence and ensure the business is well positioned to support attractive future opportunities”.

No final dividend was declared.

In the early months of FY22, Whitehaven reports it has repaid $178 million of debt drawn under its senior bank facility.

What did management say?

Commenting on the results, Whitehaven’s CEO, Paul Flynn said:

FY21 was very much a year of highs and lows both operationally and in terms of factors outside our control.

In the reporting period cyclical lows in coal price were replaced with record highs, with the gC NEWC index currently trading around of USD$170 per tonne.

While we had our hands full putting the more difficult geological conditions at Narrabri behind us, we also saw our largest production asset, Maules Creek, achieve record annual ROM production of 12.7Mt.

What’s next for Whitehaven?

The company notes that metallurgical and thermal coal prices have increased significantly from their lows in mid-2020.

Whitehaven noted:

Strong China coal demand, supported by increased economic activity and challenges in expanding domestic China coal production, compounded by China’s ban on Australian coal, have modified coal flows in the seaborne market and elevated seaborne coal prices to record levels.

It said that “tendering from Asia-based customers remains active” and the company has seen increased interest by customers to secure coal for the 2022 calendar year. It also highlighted that supply disruptions continue to hamper other major coal producing nations across the world.

Flynn said, “Today, the outlook is better than we have seen for some time, with the strong price environment putting us on an accelerated timeline to de-leveraging the balance sheet and returning cash to shareholders.”

The Whitehaven share price is up 111% over the past 12 months.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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