FY2016 Result: Return to profit, record production, debt reduced and positive outlook

Financial Highlights

Whitehaven reported a net profit after tax of $20.5 million for the financial year ended 30 June 2016, a strong turnaround from the prior year loss of $342.7 million after significant items.

All key  performance metrics improved markedly on the prior year:

  • Sales revenue rose 53% to $1,164.4 million;
  • Operating EBITDA rose 72% to $224.1 million from an increase in operating margins;
  • Cash generated from operations increased 76% to $269.3 million;
  • Unit costs fell again to average $56/t for the year;
  • Net debt was reduced by $76.7 million to $859.1 million with gearing down to 23%; and
  • Subsequent to year end the Senior debt was further reduced by $35 million

Operating Highlights

  • Record ROM production and coal sales of 15.8Mt and 15.5Mt, 29% and 43% higher respectively than the prior year.
  • Whitehaven’s newest mine, Maules Creek, was declared commercial on 1 July 2015 and was officially opened in September 2015. Maules Creek mine produced 7.8Mt ROM coal for the year, becoming Whitehaven’s largest producer.
  • Significant increase in Reserves at Maules Creek underpins an extended mine life.
  • Continued focus on costs has seen cost reductions at all mines and the Group average unit cost fall to $56/t for the year.
  • Narrabri set two new monthly production records during the year and is set to exceed these volumes when the 400m wide face longwall is installed in the second half of FY2017.
  • Both Rocglen and the Gunnedah CHPP have each recorded two years without a recordable injury setting the benchmark for all of the operations

Economic and social contribution

During the year Whitehaven made significant contributions to the New South Wales and regional economies.

  • A total of $88.2 million paid to the NSW Government in royalties;
  • Spent more than $200 million with local businesses in NW NSW;
  • Provided grants to 81 local community groups;
  • Increased the number of indigenous employees to 11% of the workforce, well above industry and public sector averages; and
  • Signed a Native Title Agreement with the Gomeroi nation.

Commenting on the results, Whitehaven Coal Managing Director and CEO Mr Paul Flynn said:

“We are delighted with this strong result, particularly in the face of a challenging year for the industry.

“Our successful introduction of further cost reductions means our business model can operate profitably at lower price levels and that the business is resilient to cyclical pressure on price and demand.

“Whitehaven is establishing a strong track record of making good on its commitments; our growth strategy is being successfully implemented and our growth prospects are encouraging.

“The high quality coal we are producing delivers higher yield and lower emissions and is in growing demand from Asia’s new generation of power plants, which are far more efficient and produce lower emission than those in Australia.

“Whitehaven is positive about the medium and long term outlook for coal, particularly the outlook for the high quality coal we produce.”

The full release documents are available at the links below:

FY16 Financial Results ASX Release

Full Year 2016 Results Presentation

Financial Annual Report 30 June 2016

Appendix 4E

The audio of the FY16 Investor Call is available below:

The webcast of the FY16 can be accessed at this link: FY16 Full Year Results Webcast

Paul Flynn, Managing Director and CEO, was interviewed on Sky News Business and ABC’s The Business regarding the results. Videos of the interviews are available below: