New Hope share price charges higher despite profit crunch and huge dividend cut

Weaker coal prices have hit this miner's profits and dividend hard.

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Coal miner holding a giant coal rock in his hand making a circle with his hand, symbolising a rising share price.

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The New Hope Corporation Ltd (ASX: NHC) share price is charging higher on Tuesday.

In morning trade, the coal miner's shares are up 2.5% to $4.55.

This follows the release of the company's half-year results before the market open.

New Hope share price higher despite profit crunch

  • Revenue down 45.9% to $856.6 million
  • EBITDA down 59% to $424.8 million
  • Profit after tax down 62.4% to $251.7 million
  • Interim dividend down 57% to 17 cents per share

What happened during the first half?

For the six months ended 31 January, New Hope reported a 45.9% decline in revenue to $856.6 million and a 59% reduction in EBITDA to $424.8 million.

The latter will not have been a surprise to the market as the company pre-released its EBITDA expectations last month with the release of its quarterly activities report.

What wasn't released until now was its 62.4% decline in profit after tax to $251.7 million. This reflects a 58% decline in its average realised price to A$197 per tonne and an 11% increase in cash costs, which was partially offset by hedging and 28% lift in saleable coal production.

In light of the profit decline, the New Hope board elected to cut its fully franked interim dividend by 57% to 17 cents per share. This represents a total distribution of $143.7 million for the half and equates to a 3.7% dividend yield at current prices.

Management commentary

New Hope's CEO, Rob Bishop, was pleased with the half. He said:

Consistent operational performance, delivery of our organic production growth plans, and disciplined cost control have allowed us to maintain strong margins despite coal prices retreating from record highs.

Mr Bishop also appears positive on the company's outlook thanks to its low costs and organic growth opportunities. He adds:

Our low-cost coal assets, and targeted organic growth, will favourably position New Hope to take advantage of the demand for high-quality coal expected through the energy transition. Performance during the half has demonstrated New Hope's resilience to price volatility and the potential of our growth pipeline, and we are pleased to reward shareholders with an interim fully franked dividend of seventeen cents per ordinary share.

The New Hope share price is down 8% over the last 12 months.

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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