Whitehaven Coal (ASX:WHC) share price slumps despite positive profit outlook

Record-high coal prices spell good news for Whitehaven as it looks to become debt-free

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The Whitehaven Coal Ltd (ASX: WHC) share price is falling today despite the company releasing a positive quarterly report.

The company states record-high coal prices will see its profits increasing soon, helping it to become debt-free in early 2022.

That’s particularly impressive given Whitehaven owed $787.5 million at the end of financial year 2020.

However, the market doesn’t seem to be sharing Whitehaven’s positive sentiments.

At the time of writing, the Whitehaven Coal share price is $3.25, 1.36% lower than its previous close.

Let’s take a closer look at the pure-play coal miner’s performance over the September quarter.

The quarter that’s been for Whitehaven

The Whitehaven Coal share price is slipping today despite good news for the 3 months ended 30 September 2021.

The company has announced its bottom line has begun to be bolstered by record-high thermal coal prices, which reached an average of US$167.52 per tonne over the September quarter, according to the GlobalCOAL Index. That represents a 54% increase on that of the June quarter.

As of 13 October, the GlobalCOAL Index puts the price of thermal coal even higher, at US$232.06 a tonne.

The increased prices have likely boosted confidence in Whitehaven’s expectation of being in a net cash position in the March quarter of 2022.

However, Whitehaven didn’t realise such astronomical prices over the quarter just been. The company’s realised average thermal coal price for the September quarter was US$142 per ton – 15% less than the index’s average price.

The disparity was due to most of Whitehaven’s thermal coal book having been priced in previous periods and its fulfilment of previously agreed-upon fixed-price sales. Additionally, some of its sales were delayed from previous quarters.

However, the company expects to see its profits boosted in coming months.

Finally, here’s a breakdown of Whitehaven’s technical performance over the quarter just been:

  • Run-of-mine production of 5.2 million tonnes – up 15% on the prior corresponding period (PCP);
  • Saleable coal production of 4.7 million tonnes;
  • Total managed coal sales of 4.6 million tonnes – down 23% on that of the PCP;
  • Managed own coal sales of 4.2 million tonnes – down 25% on that of the PCP;
  • Total equity coal sales of 3.9 million tonnes;
  • Equity sales of own coal of 3.4 million tonnes –  25% less than PCP; and
  • As of 30 September, it had managed coal stocks of 3.2 million tonnes ­– 80% more than it did as of 30 September 2020.

Whitehaven Coal share price snapshot

Despite today’s dip, the Whitehaven Coal share price has been performing well so far this year.

It has gained 97% since the start of 2021. It’s also 245% higher than it was this time last year.

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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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