Whitehaven share price tanks 7% on downgraded FY23 guidance

The ASX coal miner expects lower production and sales in FY23 due to problems at Maules Creek.

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Key points

  • The Whitehaven Coal share price is falling after the ASX coal miner downgraded its production guidance for FY23
  • Labour shortages, bad weather in March, and other operational issues at Maules Creek mean overall production forecasts have fallen below the bottom end of the previous guidance 
  • Whitehaven expects to produce approximately 1Mt to 1.2Mt less coal than previously forecast 

The Whitehaven Coal Ltd (ASX: WHC) share price is tumbling this morning after the ASX coal miner downgraded its full-year guidance for FY23.

The Whitehaven share price dropped to $6.44 in early trading, a fall of 7.3% on yesterday's closing price.

Labour shortages and bad weather have caused delays in production, resulting in a downgraded forecast for production and sales and increased unit costs for the full-year FY23.

Whitehaven previously expected managed run-of-mine (ROM) coal production of 19Mt to 20.4 Mt across its three key assets at Maules Creek, Narrabri, and Gunnedah.

The company is now guiding full-year production of 18Mt to 19.2Mt instead.

The coal miner previously guided managed coal sales of 16.5Mt to 18Mt but is now guiding 15.3Mt to 16Mt. It previously guided equity coal sales of 13.1Mt to 14.4Mt but is now expecting 12.3Mt to 12.9Mt.

Whitehaven has also revised its unit cost of coal (excluding royalties) expectations upward from a range of $95 to $102 per tonne to a range of $100 to $107 per tonne.

Why has Whitehaven downgraded its FY23 guidance?

In a statement, Whitehaven said production during the March quarter came in "below plan" at 4.3Mt.

The company said:

Labour shortages are being felt across the business, but the impact of several additional operational constraints at Maules Creek meant its production increased by only 9% relative to the December quarter.

This lower than planned increase reflects labour constraints, congestion arising from limited dumping locations while keeping manned and unmanned fleets separate, and intermittent weather interruptions in the month of March.

What's next?

The company said overall production should get better in the June quarter. However, the problems at Maules Creek have pushed its overall forecasts below the bottom end of the previous guidance.

Lower production in the second half of FY23 "will result in some sales volumes being pushed into FY2024", the company said.

During the March quarter, Whitehaven achieved an average coal price of about $400 per tonne.

On 31 March, its net cash position was $2.7 billion. It generated about $1.2 billion in cash from operations during the quarter.

Whitehaven Coal will release its official March quarter production report next Friday 21 April.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price has been smashed in 2023. It is currently down 26% in the year to date.

Whitehaven shares shot the lights out in 2022, rising by more than 260% over the 12 months to 31 December due to booming commodity prices.

Motley Fool contributor Bronwyn Allen 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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