Whitehaven Coal share price sinks despite 423% profit jump

This coal miner had a sensational half and delivered huge profit growth…

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Key points

  • Whitehaven Coal has released its half year results
  • Thanks to sky high coal prices, the miner has delivered strong profit growth
  • While this allowed the miner to quadruple its interim dividend, it was still short of the market's expectations

The Whitehaven Coal Ltd (ASX: WHC) share price is on the move on Thursday.

In morning trade, the coal miner's shares are down 5% to $7.78.

This follows the release of Whitehaven Coal's half year results.

Whitehaven Coal share price sinks despite huge profits

  • Half year revenue up 164% to a record of $3,809.2 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) up 319% to $2,653.3 million
  • Net profit after tax up 423% to $1,782 million
  • Fully franked interim dividend up 300% to 32 cents per share

What happened during the half?

For the six months ended 31 December, Whitehaven Coal reported a 164% increase in revenue to $3,809.2 million. This was driven by a 4.8% increase in production to 8.8Mt and an achieved average coal price of A$552 per tonne. The latter is up from $202 per tonne in the prior corresponding period.

And thanks to stronger margins, Whitehaven Coal's EBITDA was up 319% to $2,653.3 million and its net profit was up over 400% to a record of $1,782 million. Both metrics were in line with market consensus estimates.

The coal miner's cash generation was also stunning, with cash from operations coming in at $2.5 billion compared with $567.4 million in the first half last year.

This allowed the Whitehaven Coal board to quadruple its interim dividend to a fully franked 32 cents per share. However, as large as it is, this dividend was well short of the 44 cents per share consensus estimate, which could explain some of the weakness in the Whitehaven Coal share price today.

Management commentary

Whitehaven Coal's CEO, Paul Flynn, was pleased with the company's performance given the challenges it faced from inclement weather. He commented:

In the first half of FY23, global energy shortages continued to underpin strong pricing. Weather related production constraints in New South Wales contributed to tight supply. Prices for high quality, high-CV coal held at very high levels during the half year and our customers remain focused on energy security as a key priority. We achieved a record realised average price of A$552 per tonne in the half year, a 173% increase on the same period last year.

Despite weather interruptions and ongoing labour constraints, the business performed well operationally. Our Narrabri underground mine delivered a strong operational performance and our safety results continued to improve with a rolling 12 month recordable injury frequency rate of 5.2 representing a 15% year on year improvement.


Management has reaffirmed its guidance for FY 2023.

It expects production of 19Mt to 20.4Mt, coal sales of 16.5Mt to 18Mt, and unit costs (ex royalties) of $95 to $102 per tonne.

Commenting on its outlook, management said:

In metallurgical coal markets, pricing has strengthened as a result of China lifting its COVID related restrictions and China-Australia trade flows re-opening. We remain on track to deliver within the range of our overall production, sales and cost guidance for FY23, as issued on 9 November 2022. We expect improved weather conditions to persist in the second half based on current forecasts, however, labour constraints are ongoing. Mine sequencing plans allow for opportunities to lift volumes in the second half, underpinning our expectation of meeting overall volume targets.

The Whitehaven Coal share price is still up over 150% over the last 12 months despite this decline.

Motley Fool contributor James Mickleboro 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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