New Hope (ASX:NHC) share price up 10% amid huge first half profits and special dividend

Business is booming for this coal miner…

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Key points

  • New Hope has released its half year results which revealed huge profit growth.
  • The coal miner has been benefitting greatly from sky high coal prices.
  • This has allowed New Hope to reward its shareholders with a special dividend.

The New Hope Corporation Limited (ASX: NHC) share price is having a strong day following the release of its half year results.

On Tuesday morning, the coal miner's shares are up 10% to $3.22.

New Hope share price jumps on strong profit growth

  • Total revenue up 153% to $1,025 million
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up to 582% to $554.4 million
  • Net profit after tax of $330.4 million, compared to a loss of $55.4 million a year earlier
  • Fully franked interim dividend up 325% to 17 cents per share
  • Special dividend of 13 cents per share fully franked

What happened during the first half?

For the six months ended 31 January, New Hope reported a 153% increase in revenue to $1,025 million and a whopping 582% jump in EBITDA to $554.4 million. This was underpinned by a 7% increase in sales volumes to 5.1Mt, a reduction in site cash costs, and a 147% lift in its realised price to $192.4 per tonne.

This ultimately led to New Hope bouncing back from a loss of $55.4 million a year earlier to a net profit after tax of $330.4 million.

Pleasingly for shareholders, the New Hope board has elected to share a significant part of its profits with them. Not only did it increase its fully franked interim dividend by 325% to 17 cents per share, but it has also declared a fully franked 13 cents per share special dividend.

Management commentary

New Hope's Chief Executive Officer, Rob Bishop, was pleased with the half and believes the company is well-positioned to continue generating strong, sustainable shareholder returns.

This is due to the fact that demand for high quality, lower emissions thermal coal is expected to remain robust in the short to medium term as supply remains constrained.

Commenting on the half, he said: "Cost control disciplines that were introduced during the 2021 financial year in response to a period of depressed prices have been embedded across the Group and will ensure that New Hope remains in the lowest cost quartile compared to other producers of seaborne thermal coal."

"Bengalla dealt very well with the challenges from COVID-19 related labour shortages and wet weather to minimise the impact on coal production, which was down only 1 per cent compared to the first half of last financial year. The mine will shortly take delivery of two additional haul trucks which will increase saleable production during the second half of the financial year."

"Strong demand and lower than normal stock levels held by customers have pushed thermal coal prices well above the long-term average. Newcastle Index pricing is currently above US$300/t, and our forward sales book will support robust returns," Bishop added.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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