Coal cash cow Whitehaven reaps in the rewards, reaffirms FY22 guidance

Whitehaven Coal (ASX: WHC) is turning into a cash machine amid a record run for coal prices and operational improvements in the March quarter.

March quarter at a glance

• Record average coal price of $315/t 

  • $204/t in the second-half of FY22 and $101/t a year ago

• Run-of-mine (ROM) production of 5.2m tonnes

  • 62% higher than the December quarter, down 5% compared to last year

During the quarter, Whitehaven also completed a $67m share buyback and paid $80m in dividends.

The company reaffirmed its FY22 guidance, which includes a ROM coal production between 19m to 20.5m tonnes, up 15% to 24% compared to FY21.

Unit costs are expected to land between $79 and $84 a tonne compared to $74 in FY21.

Managing Director Paul Flynn said coal prices “remain very well supported in an environment of strong demand and constrained supply.”

Notwithstanding challenges such as a tight labour market, covid-related absenteeism and wet weather events, Flynn said the company managed to deliver operational and product improvements in the quarter.

Coal cash cow

“Cash generation was strong in the March quarter. As at 19 April the business holds a $161 million net cash positive position,” said Flynn.

In the December 2021 quarter, Whitehaven had a net debt of $403m.

Taking into consideration the $67m share buyback and $80m paid out in dividends, Whitehaven generated approximately $711m cash or roughly 70 cents per share for the quarter.

In the first-half of FY22, Whitehaven said cash generated from operations was $567.4m.

Meaning, in the past three quarters, the company has generated $1.28bn cash or approximately 27% of its current market cap.

Whitehaven Coal 12-month price chart