10% dividend up for grabs after New Hope posts a ten-fold jump in profits
New Hope is the latest coal miner to post a monster FY22 earnings result.
Source: iStock
Mentioned
KEY POINTS
- New Hope's average realised coal prices jumped 178% year-on-year to $282 a tonne
- Management expect a higher-for-longer coal price narrative as demand continues to outstrip supply
- New Hope shares will go ex-dividend on Monday, 24 October for 56 cents per share
New Hope (ASX: NHC) is the latest coal miner to post a monster earnings result, with profits up more than 11-fold to $983m.
Earnings at a glance:
Full year | 2022 | 2021 | % change |
|---|---|---|---|
Revenue ($m) | 2,552 | 1,048 | 143.5 |
Underlying EBITDA ($m) | 1,577 | 367.2 | 329.5 |
Saleable coal production (Mt) | 7.9 | 9.6 | -17.7 |
Net profit ($m) | 983 | 79.35 | 1,139 |
Final dividend (cps) | 56 | 7 | 700 |
Source: New Hope | Table: Market Index
Production falls but who cares
New Hope produced 7.9m tonnes of saleable coal in FY22, down -17.7% compared to a year ago. The flagship Bengalla operation was heavily impacted by unusually high rainfall and covid-related workforce shortages. Costs were also on the rise, with the underlying cost base up 23%.
Still, the decline in production volumes was handily offset by a 176% increase in average realised sales price of $281.8 a tonne.
"Robust market demand for high quality, low emission thermal coal in the first-half of the year was then further strengthened by the Russia-Ukraine conflict, which tightened supply," the company said in a statement.
"With security of supply paramount to our key customers, our outlook is strong with a largely sold and optimally priced forward sales book for the next 12 months."
"With the GC NEWC index pricing greater than US$400 a tonne, the Company is well positioned to achieved continued strong cash generation."
Newcastle coal futures chart (Source: TradingView)
Massive dividend up for grabs
New Hope declared a final plus special dividend worth a combined 56 cents per share. The stock will go ex-dividend on Monday, 24 October.
Based on its current share price of $5.95, this represents a yield of 10.6%.
During FY22, the company generated $1.14bn cash from operations, which helped pay off outstanding debts and support the outsized dividends. New Hope said that future surplus capital will be used for:
Expansion capital for New Acland Stage 3 and Bengalla Life of Mine increase
M&A opportunities
Fully franked dividends
On market / Off market buy-backs or capital returns
Outlook for coal
New Hope expects a higher-for-longer coal pricing environment as demand continues to outstrip supply. Even at current sky high prices, a limited supply response is expected.
Source: New Hope FY22 Financial Results Release
