Whitehaven [ASX:WHC] Rises on ‘Record Coal Prices’ in June Quarter

Whitehaven [ASX:WHC] Rises on  ‘Record Coal Prices’ in June Quarter

Whitehaven Coal [ASX:WHC] released its June quarter report this morning, reporting ‘record coal prices and solid production results’.

WHC believes the results show a strong quarter and FY22 outlook, with production delivery meeting guidance.

WHC shares were up as much as 9.5% in early morning trade before pulling back somewhat.

While the broader market has faltered this year, the global energy crunch has seen Whitehaven rise 125% year-to-date, trouncing the ASX 200 benchmark.

ASX:WHC stock chart whitehaven

Source: Tradingview.com

Whitehaven’s ‘record’ June quarter

Whitehaven reported a ‘record average coal price’ for Q4 FY22, reaching AU$514 per tonne.

FY22 average coal price came to AU$325 a tonne.

Whitehaven now expects FY22 EBITDA to be around $3 billion, compared with $200 million in FY21, a steep jump.

Whitehaven reported generating $1.4 billion of cash during the quarter, ending the period with a net cash position of $1 billion.

Production for the June quarter was up 21%, with 6.4 million tonnes mined, managed run-of-mine (ROM) coal production reaching 20 million tonnes. These meet the company’s guidance expectations of between 19 and 20.5 million tonnes.

Total equity sales saw a coal production turnover of 4.4 million tonnes, a 23% rise on the March quarter.

However, there was a 2% decrease on 2021’s numbers for total equity sales in FY22, equating to 14.2 million tonnes of coal.

Nevertheless, FY22’s managed sales met guidance of 17.6 million tonnes. The sales comprised 84% thermal coal and 16% metallurgical coal, with 92% being high CV thermal coal.

The coal miner said operations and sales were strong; however, ‘intermittent rain disruption’ combined with ‘COVID-related absenteeism’, and labour shortages have presented challenges.

Whitehaven also said it’s aiming to complete its 10% share buyback within a revised total cost of $550 million, having already repurchased roughly 7% of the issued capital.

ASX:WHC table of financials

Source: Whitehaven Coal

Whitehaven, another one clinched by inflation

Whitehaven CEO Paul Flynn commented on the miner’s June quarter performance:

With demand for high quality coal outstripping global supply, Whitehaven remains well placed to support energy security through transition and to deliver strong returns for shareholders.

Coal prices set a new record during the June quarter and continue to be well supported.

Stronger operational performance has enabled us to deliver our FY22 production and sales guidance in spite of a tight labour market and COVID-related absenteeism.

Improved operational performance combined with record high coal price will underpin our strongest ever full year result. A net cash position of $1.0 billion at 30 June, with ongoing strong cashflows, gives Whitehaven a continuing strong balance sheet with cash reserves to fund future growth and also return capital to shareholders through franked dividends and share buy-backs.’

In an update on the general market conditions, Whitehaven flagged that a European coal import embargo from Russia is set to commence next month, which WHC expects to ‘tighten further the supply of high quality thermal coal’.

Whitehaven said it will provide FY23 production and sales guidance during its FY22 results release slated for 25 August.

Inflation buster stocks

Few businesses are immune to inflationary pressures. Households and businesses are feeling the pinch.

But as Whitehaven has demonstrated, some businesses can withstand inflation better than others. In fact, some can even benefit from inflationary times, as WHC’s ballooning FY22 EBITDA figure shows.

So some stocks have the potential to be ‘inflation busters’ in the current environment.

Recently, we released a research report on five inflation buster stocks for 2022.

If you want to read it, you can access the report, for free, here.


Kiryll Prakapenka,

For The Daily Reckoning Australia