Whitehaven Coal share price slips despite record $1.95 billion profit

The coal producer has reported its earnings for FY22. Here are the details.

| More on:
Miner with a light in the darkness as he moves coal

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Whitehaven Coal shares are currently down by almost 5%
  • This comes despite the company posting strong earnings for FY22
  • Outlook for the demand and price of coal for FY23 is tracked to remain strong

The Whitehaven Coal Ltd (ASX: WHC) share price is in the red this morning after the company posted its results for FY22.

Shares of the company are currently trading for $7.54 each, down 4.56% on Wednesday's closing price.

Let's go over the highlights of the report.

Whitehaven Coal share price dips despite record earnings

The total cash generated from Whitehaven's operations for FY22 stood at $2.6 billion.

Due to the company's robust operating cash flows in FY21, it is returning value back to investors through the issuance of a fully-franked dividend and completing its share buyback program that commenced in February last year.

A fully franked dividend of 40 cents per share will be paid on 16 September. This takes the full-year dividend to 48 cents per share.

Whitehaven bought back 76.37 million shares in FY22, or around 7% of its shares outstanding, for a total value of $362.6 million. In FY23, the company seeks to complete its commitment to buy back 10% of its shares within the cap of $550 million.

What else happened in FY22?

Whitehaven's CEO and managing director Paul Flynn said results were buoyed in FY22 due to an asymmetry in supply and demand for coal. This was said to be caused by energy shortages and sanctions against Russia for their initiation of the war in Ukraine.

The result of these tailwinds was the price of coal reached "record levels", with an average price of $325 per tonne in FY22, up from $95 per tonne in FY21, or a 242.10% increase.

Whitehaven said its strong performance was delivered in the face of numerous headwinds throughout the year; these included "COVID-related absences, labour constraints, and weather interruptions".

The influx of cash Whitehaven reported was used to pay down its debt on its balance sheet. Net cash ended at $1.03 billion, up from net debt of $808.5 million in FY21.

The company also spent $34 million on development projects during this period. The company spent money on land and engineering its existing sites throughout Australia.

What did management say?

Commenting on the results, Flynn said:

Coal prices are at record levels and customers are focused on energy security now more than ever before.

We have worked hard to position ourselves to maximise the opportunity arising from historically high prices. We achieved a record realised average price of A$325 per tonne in FY22, compared with A$95 per tonne in the prior year.

Demand for high-quality seaborne thermal coal is expected to remain strong throughout FY23 and high-CV coal prices should continue to be well supported.

What's next?

The company notes that high demand for coal is expected throughout FY23 and that it is positioned to keep up with its production rate. Guidance total run-of-mine coal is expected to be between 20 and 22 metric tonnes. In FY22, this figure stood at 20 metric tonnes.

Managed and equity coal sales are also expected to fall in line with numbers seen in FY22. Managed coal sales are expected to be between 17.5 and 18.85 metric tonnes, and equity coal sales between 14.1 and 14.9 metric tonnes.

Whitehaven expects its capital expenditures to just about double in FY23, as it posted guidance of $287 to $360 million for this period, up from $154 million in FY22. Funds will be used to grow and maintain its development projects.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price is up 177% year to date and 245% over the past 12 months. Meanwhile, the S&P/ASX 200 Energy Index (ASX: XEJ) is up 37% and 49%, respectively, over those same timeframes.

Whitehaven Coal has a market capitalisation of $7.41 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.

More on Earnings Results

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Earnings Results

Which ASX shares delivered the biggest profit jumps of the earnings season?

These companies revealed at least a 70% profit boost in their latest earnings reports.

Read more »

A man and woman sit next to each other looking at each other and feeling excited and surprised after reading good news about their shares on a laptop.
Earnings Results

Why this ASX 300 share is leaping 14% despite being branded a 'sell'

Falling profits are putting investors off the fund manager.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Technology Shares

Life360 share price rockets 24% after smashing FY23 earnings expectations

This tech stock delivered a very strong result this morning. How strong was it?

Read more »

a man in a shirt and tie holds his chin in thoughtful contemplation and looks skywards as if thinking about something while a graphic of a road with many ups and downs unfurls behind him.
Earnings Results

What's with the Neuren Pharmaceuticals share price today?

The full market reaction to the Daybue developer's FY23 earnings report won't be seen until tomorrow.

Read more »

Two workers at an oil rig discuss operations.
Earnings Results

2 ASX energy shares going gangbusters on today's earnings results

The ASX energy shares are drawing investor interest today after releasing their half-year earnings results.

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

This ASX 300 stock just jumped 12%! Here's why

The ASX 300 stock is impressing investors with its half-year earnings results.

Read more »

Shot of a scientist using a computer while conducting research in a laboratory.
Earnings Results

Mesoblast share price tumbles on US$32.5m half-year loss

This biotech continues to burn cash.

Read more »

Man and woman sitting at casino table playing poker
Earnings Results

Star Entertainment share price jumps 5% on strengthening outlook

ASX 200 investors are bidding up the Star Entertainment share price on Thursday.

Read more »