Yancoal share price lifts on 677% earnings boost

What drove Yancoal's record revenue and profit? Let's take a look.

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Key points

  • The Yancoal share price is in the green this morning after the company released its 1H22 results
  • The ASX-listed coal miner reported record revenue and EBITDA  for the first half of 2022
  • ROM coal production fell compared to the first half of 2021

The Yancoal Australia Ltd (ASX: YAL) share price is climbing today amid the company's financial results for the first half of 2022.

The coal company's share price is currently $5.56, a 1.65% gain. In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 0.48% today.

Let's take a look at Yancoal's financial results.

Profit lifts, but production lower

Highlights of Yancoal's 1H 2022 results include:

  • Operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $3.153 billion, up 676.6% from $406 million in the first half of 2021
  • Revenue of $4.776 billion, up 169% from $1.775 billion in 1H21
  • Profit after tax of $1.738 billion, up 1247% compared to $129 million in 1H21
  • EBITDA margin of 65%
  • Cash inflows of $2.8 billion
  • Run-of-mine (ROM) coal production of 25.8 million tonnes
  • Cash at hand $3.4 billion at 30 June, net debt of $232 million
  • An interim dividend of 52.71 cents

What else did the company report?

Yancoal's record half-yearly revenue was driven by higher coal prices. The average realised coal price surged 234% to $314 per tonne.

The company also delivered a record EBITDA and EBITDA margin. Huge coal prices outweighed lower coal production.

Total ROM coal production of 25.8 million tonnes fell from 29.3 million tonnes in the first half of 2021.

The lower coal production was due to the impact of COVID-19, wet weather, and inflation cost pressures.

The interim dividend of 52.71 cents per share, unfranked, will cost $696 million.

Management comment

Commenting on the results, CEO David Moult said:

Yancoal delivered a record six-month financial performance. The remarkable turnaround in the company's financial position is driven by the coal price but couldn't be achieved without the unwavering focus on the day-to-day operations by all the people across the seven mines.

The positive outlook for the coal prices, and the record 1H Result puts Yancoal on track for another full-year record in 2022.

What's ahead?

Yancoal is predicting thermal coal prices to remain high in 2023. International thermal coal indices are at record levels at the onset of the second half of 2022.

Looking at 2022 as a whole, Yancoal is forecasting saleable coal production of 31 to 33 million tonnes. Cash operating costs are expected to be $84 to $89 per tonne. Capital expenditure is predicted to be between $550 and $600 million.

The production and operating guidance allows for more rainfall in the second half of the year. But if weather disruptions are greater than predicted, Yancoal could face water storage capacity constraints.

In relation to the coal price, Yancoal said:

The record financial performance for 1H 2022 does not fully capture the benefit of recent record coal price. Ongoing supply-side constraints and demand resulting from shortages and disruption to global energy markets should sustain elevated prices for seaborne thermal coal into 2023.

Yancoal expects to deliver a record financial performance in 2022.

Yancoal share price snapshot

The Yancoal share price has soared 136% in the past year, while it has surged 114% year to date.

For perspective, the benchmark ASX 200 has lost 5% in the last year.

Yancoal has a market capitalisation of more than $7 billion based on the current share price.

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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