17 February 2021

Half year results FY21

Lower coal prices impact H1 earnings

Safety performance

The safety outcome for the Group for the 12 months ending 31 December 2020 was a total recordable injury frequency rate (TRIFR) of 5.41. The Group TRIFR remains well below the New South Wales (NSW) coal mining average of 12.79.

The Company is committed to achieving zero harm to its people and environment, and management is striving for better safety performance across all operations.

No known cases of COVID-19 at any of our sites to date and operations remain largely unaffected but for distancing and hygiene measures

Financial highlights

• EBITDA of $37.2m, down 79% on prior comparative period (pcp), reflecting a lower average achieved coal price for H1 FY21 of A$80/t vs H1 FY2020 A$108/t
• Net loss after tax of $94.5m, compared to a net profit after tax of $27.4m in the first half of FY20
• Cash generated from operations of $54.9m, a decrease of 55%
• Unit costs decreased 8% to A$70/t, versus pcp of A$76/t
• H1 FY21 earnings loss is due to the softening of coal prices, partially offset by an increase in sales volumes and a decrease in costs
• $411.8m of available liquidity
• Net debt of $823.1m as at 31 December 2020
• Due to the adverse impact of the significant contraction in coal prices has had on earnings for the period, the Board has determined an interim dividend will not be declared.

Operating highlights 

Equity ROM coal production for the half was 7.7Mt, 28% above pcp, with the opencut operations in the pcp being impacted by dust and smoke events and Narrabri underground mine having a scheduled longwall change-out from LW108 to LW109 during November and December 2019.

Equity coal sales, including purchased coal, were 8.7Mt, 3% above pcp, reflecting the underlying increase in ROM coal production, partially offset by the impact of NCIG shiploader outage on sales, as reported in the December 2020 Quarter Production Report on 14 January 2021.

Equity metallurgical coal sales were 14% of total H1 FY21 sales, below pcp at 21%.

Corporate highlights 

During the first half of FY2021, Whitehaven reached a number of key milestones for a number of our development projects. Firstly, on the 12 August the NSW Independent Planning Commission (IPC) approved the Vickery Extension Project. In December, Environmental Impact Statements were submitted for both Narrabri Stage 3 and Winchester South development projects. On the 16 December, the Company released its maiden Coal Reserves Statement for the Winchester South Project and announced an associated update to its Coal Resources.

As announced at the FY2020 Results on 26 August, Whitehaven commenced in the closing stages of FY20 a business improvement program, Project STRIVE, which is designed to achieve greater consistency of operational performance, improve productivity and lower costs. Over the past 6 months the business has begun to implement many of the core recommendations of this review with productivity and cost improvements already being achieved. For the current financial year, we estimate achieving savings of $0.70/t, increasing to $2.00/t over next two years.

During the half, the Company sought and received from its finance providers an amendment to one of three covenants, being its Interest Cover Ratio covenant. Subsequent to the end of H1 FY2021, the Company prepared a Compliance Certificate for delivery to its banking syndicate for the 12 months ended 31 December 2020, which reported compliance with the original unadjusted ICR covenant.

Commenting on today’s results, Whitehaven Coal Managing Director and CEO Paul Flynn said:

“The impacts of subdued pricing on seaborne coal markets were a key feature of H1 results as COVID‑19 impacts on economic and industrial activity continued to be felt.”

“The business responded strongly to these challenging market conditions, including through improvement measures that delivered meaningful cost reductions and greater operational efficiency, offsetting price headwinds to some extent.”

“We have closed out H1 FY21 with strong levels of liquidity, strong banking support and we are focused on retiring debt against the backdrop of the improving price environment.”

“With future savings targets identified and coal markets rebalancing in response to demand signals we are optimistic about achieving stronger outcomes through the second half.”

Read the full half year results FY21 release here. The Half Year Financial Report and Presentation are available at the Results Centre.

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