Coal news and updates

Even with their recent stability, coal prices may not have bottomed, New Hope Corp has warned after disclosing further earnings weakness.

 

Its net profit slumped to $15 million in the six months to the end of January well below the $34.2 million profit a year earlier. Revenue fell to $229.4 million from $269.1 million.

Earnings a share slid to 1.8¢ from 4.1¢, although after taking into account non-regular items it stood at 0.3¢, up from a loss a share of 0.8¢ a year earlier.

The interim dividend has been halved to 2¢ from 4¢ as New Hope seeks to conserve cash.

"This is a time of continuing challenges for Australian coal producers," managing director Shane Stephan said in a statement.

The outlook for Asian seaborne thermal coal markets was starting to show signs of stabilising after a period of weakness driven by Chinese import contraction, New Hope said, with thermal coal spot market price indices relatively stable in Australian dollar terms over the past quarter as the queue of ships at Newcastle has more than doubled to about 20 vessels.

However, there was no consensus on the outlook for thermal coal prices, forcing the company to continue to squeeze costs, it said.

The bulk of its earnings came from investments, which contributed $15.17 million before tax, while the coal, oil and gas units earned just $4.5 million. Despite the weak first-half performance, analysts have tipped a full-year net profit of about $69 million.

In the six months to the end of January, coal production fell 12 per cent to 2.5 million tonnes, due largely to poor weather, with sales declining by the same amount to 2.7 million tonnes as typhoons affected shipping schedules.

New Hope's shares are holding at levels last seen in 2007.

In late 2015, New Hope agreed to buy a 40 per cent stake in the Bengalla coal mine from Rio Tinto for $865 million. When it last ruled off its books, it had $1 billion in cash, which will be largely consumed by the Bengalla acquisition that is due to be settled by the end of March. 

Bengalla "is very competitively positioned on the global export thermal coal cost curve and has a 25-year permitted mine life at current production levels, underpinned by approximately 218 million tonnes of marketable coal reserves", it said.

Source: smh