Coronado share price jumps on 3,200% earnings surge

The company's half-year EBITDA eclipsed even its highest-ever full-year figure.

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Key points

  • The Coronado share price is up 7% on Tuesday after the company announced windfall earnings in its half-year FY22 results
  • Adjusted EBITDA saw a record 3,204% increase on HY21
  • The company announced a dividend of US 7.5 cents per CDI

The Corando Global Resources Inc (ASX: CRN) share price is up 7% after the coal mining company announced a massive earnings increase in its half-year FY22 results.

Shares in Coronado are currently trading for $1.615 apiece, up 6.6% on their previous closing price of $1.515.

The higher global price of coal sent the company's adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) up a massive 3,204% from the HY21 figure.

Let's check the details of the company's results for the half year ending 30 June 2022.

Coronado's half-year earnings highlights

  • Revenue US$1,978 million, up 147.4% from HY21
  • Net income US$562 million, up 685% from HY21
  • Adjusted EBITDA US$849 million, up 3,204% from HY21
  • Group average realised met price per tonne sold US$292.8/t, up 193.4% from HY21
  • Half-year dividend declaration of US$125 million, or US 7.5 cents per CDI

Coronado's revenues were spurred by an increase in metallurgical coal pricing, as well as higher global demand for steel. Another factor in its favour was the reduced global supply of coal during HY22 amid the conflict in Ukraine.

However, one headwind the company reported for this half of the year was lower sales and production volumes. These were affected by wet weather, maintenance, and geological problems, Coronado said. 

Another issue was higher costs per tonne sold. The company cited inflation, lower production volumes, and increased royalties as the main causes.

What else happened in FY22?

In June, Coronado was included in the S&P/ASX 200 Index (ASX: XJO).

The company also released a sustainability report outlining its plans to reduce emissions and better care for the environment.

Coronado's share price slipped 3% amid the company's annual general meeting in May. This selloff was despite the metallurgical coal index reaching a record price of US$670 per tonne in March.

What did management say?

Coronado Managing Director and CEO Gerry Spindler made the following comments regarding the company's performance:

Coronado's half-year Adjusted EBITDA eclipses the highest full-year Adjusted EBITDA ever reported in the history of Coronado. These strong results are due to the higher price environment, which has resulted in record price realisations for our high-quality metallurgical coal products, but also from the structural changes made to our business over the past 12 – 18 months that have allowed us to take advantage of the improved markets.

Spindler also gave guidance for what the rest of the year could look like:

As we look to the second half of 2022, the prospect of strong financial returns remains despite recent reductions in Metallurgical coal prices. Coronado's capital investment in its operations drives the second half weighted production plans, which we anticipate will see us deliver production levels exceeding 2021 levels and lower second half costs.

What's next?

The company cited a number of headwinds. These include the war in Ukraine, the continuing lockdowns in China, and the global demand for thermal coal leading to an increase in energy prices.

The company also said the increase in the price of coal is expected to revert back to median levels in the near future.

As such, Coronado has revised its guidance for FY22. 

The company's mining cost per tonne sold has been increased to $79-$81, up from $69-$71 per tonne sold. The company expects its salable production (MMt) to fall in the low range of 18-19 and its Capex to fall in the high range of $170 million to $190 million.

Coronado share price snapshot

The Coronado share price is currently up 30% year to date and 68% for the last 12 months. 

The company has a current dividend yield of 12.5% and a market capitalisation of around $2.7 billion.

Motley Fool contributor Matthew Farley 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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