11-year high: Whitehaven share price surges 8% on record $3b profit

Whitehaven Coal has good news to report today.

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A female coal miner wearing a white hardhat and orange high-vis vest holds a lump of coal and smiles as the Whitehaven Coal share price rises today

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Key points

  • Whitehaven reported an expected FY22 EBITDA of $3 billion, subject to audit 
  • Record average coal prices helped underpin this result, along with operational performance 
  • Whitehaven expects coal demand to continue to outstrip supply in the future 

Shares in Whitehaven Coal Ltd (ASX: WHC) are soaring today after the company released its June quarterly report.

The Whitehaven share price soared nearly 8% to $6.04 in early trade — its highest level since July 2011.

Whitehaven shares are currently trading at $5.90, a 5.08% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is trading 0.47% higher at the time of writing.

Let's take a look at what Whitehaven reported.

Whitehaven share price soars

Here are some of the highlights from Whitehaven's unaudited results:

What else did Whitehaven report in the quarter?

Whitehaven expects to produce a full-year EBITDA of $3 billion, which the company described as its "strongest ever full-year result".

Underpinning this result was a better operational performance and record high coal prices. After hitting a new record in the June quarter, Whitehaven said coal prices remained "well supported".

Managed run of mine (ROM) production for the June quarter was up 21% compared to the March quarter to 6.4Mt. The company achieved 20Mt total coal production in FY22, in line with guidance.

Total equity sales of produced coal jumped 23% compared to the previous quarter to 4.4Mt, while total equity sales hit 14.2Mt. This was down 2% from the previous financial year.

Management commentary

Whitehaven managing director and CEO Paul Flynn said:

With demand for high quality coal outstripping global supply, Whitehaven remains well placed to support energy security through transition and to deliver strong returns for shareholders.

Stronger operational performance has enabled us to deliver our FY22 production and sales guidance in spite of a tight labour market and COVID-related absenteeism.

A net cash position of $1.0 billion at 30 June, with ongoing strong cashflows, gives Whitehaven a
continuing strong balance sheet with cash reserves to fund future growth and also return capital to shareholders through franked dividends and share buy-backs.

Future coal price outlook

Whitehaven sees thermal coal prices well supported in the 2022 and 2023 financial years. However, the company expects more volatility amid global economic pressures with regard to metallurgical coal.

Whitehaven noted the NewC global coal quarterly index had jumped higher over the past seven quarters. This index is the benchmark price for seaborne thermal coal in the Asia-Pacific.

According to the company, global supply constraints, especially for thermal coal, continued in the June quarter. Whitehaven added:

Buying interest has continued from our customers in Northeast Asia who are focused on replenishment of stocks for the northern hemisphere summer period.

Interest from non-traditional buyers of Australian thermal coal also continued to progress, including from European end users.

The European coal import embargo from Russia is due to commence in August which is expected to tighten further the supply of high quality thermal coal.

Whitehaven share price snapshot

The Whitehaven share price has soared 173% in the past 12 months and is up almost 126% year to date.

In the past month, the company's share price has gained 18%, while it has risen 17% in the past week.

For perspective, the ASX 200 has shed nearly 10% in the past year.

Motley Fool contributor Monica O'Shea 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 Scott Phillips.

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