The New Hope Corporation Limited (ASX: NHC) share price is tumbling despite the company revealing an 89% jump in earnings.
Stock in the S&P/ASX 200 Index (ASX: XJO) coal producer is down 4% right now, trading at $5.50.
New Hope share price plummets despite $1b of earnings
Here are the key takeaways from New Hope's January quarterly report:
- $1 billion of unaudited underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) – an 89% jump on those of the prior comparable period (pcp)
- $983 million of cash generated from operating activities in the first half
- Thermal coal prices closed at US$357.80 for the quarter – a 59% increase on the pcp
- So far, the company has completed $31 million of its on-market buy-back
- Ended the period with $1.1 billion of cash and equivalents
The company's run of mine coal production came in at around 2.1 million tonnes last quarter – a 7.2% quarter-on-quarter drop. That left its year-to-date production down 24.7% on the pcp.
Meanwhile, coal sales slumped 22.3% quarter-on-quarter to close to 1.5 billion tonnes – leaving its year-to-date production 27.7% lower.
Finally, oil production for the quarter came in at 71,652 barrels while sales volumes slipped 7% due to a build-up of crude stock.
What else happened last quarter?
New Hope notes demand for coal weakened last quarter as Europe and Asia saw more mild temperatures and a drop in industrial activity.
Meanwhile, a price cap on coal was introduced by the New South Wales Government, limiting the black rock's value to $125 a tonne.
New Hope's 80% owned Bengalla was directed to reserve the lower of 280,000 tonnes or 15% of production for domestic consumption until June 2024.
However, due to existing supply contracts, the operation won't be impacted until early next year.
Finally, New Hope paused its on-market buy-back in December, turning its attention to buying back its 2.75% senior convertible notes with a face value of $200 million.
What's next?
The company expects demand to rebound in the coming months as COVID-19 lockdown measures ease in China, and Japan continues lessening its use of Russian coal.
New Hope share price snapshot
After roaring higher in 2022, the New Hope share price has started this year out on the wrong foot.
The stock is currently 6% lower than it was at the start of 2023. Though, it's still 119% higher than it was this time last year.
For comparison, the ASX 200 gained nearly 7% year to date and around 2% over the last 12 months.
