Whitehaven posts 22% fall in output: Guidance still on track due to record prices

Whitehaven Coal (ASX: WHC) was down -5.96% at the open after today’s update revealed that despite a 22% plunge in first-quarter production, due to severe floods effecting NSW operations, the thermal coal major generated $1.55bn of cash in the September quarter and now has a net cash position of $1.9bn.

While the company recorded an average coal price of $581 a tonne in the September quarter, up from $189 per tonne a year earlier, total equity sales slumped 32% (to 2.9m tonnes) on the June quarter or 14% on the previous quarter.

Commenting on today’s update CEO Paul Flynn noted:

“With demand for high quality coal continuing to outstrip global supply, coal prices set another record in the September quarter and continue to be well supported.”

La Niña and other disruptions

Management advised investors that while the company delivered strong operational performance in the September quarter at its Narrabri underground mine, open cut operations were impacted by wet weather and flood related road closures.

However, the company notes heavy weather was also instrumental in boosting prices for Australian coal with major developed nations continuing to shun Russian output amid its war in Ukraine.

Severe floods in NSW resulted in a week-long lock-out of its key Maules Creek mine, while haulage roads at Tarrawonga were closed for 14 days.

Beyond La Niña induced adverse weather, mining operations were also impacted by labour shortages, absenteeism and seasonal impacts relating to heavy fog and increased noise-related delays in the winter months.

In the September quarter, sales consisted of 92% thermal coal and 8% metallurgical coal with 100% of thermal coal sales being high CV coal.

Highlights within the September quarter update included:

• Annual output at Maules Creek was on track to be at the lower end of its 11.7m tonnes to 12.6m tonnes (Mt) forecast.

• Narrabri was set to report production at the top end of its 5 Mt to 5.7 Mt outlook and could even exceed it.

• Total coal exports from the Port of Newcastle for September 2022 year-to-date (YTD) were down -11.9% (14.2Mt) compared to the previous period and down -15.5% (18.9Mt) compared to the September 2019 YTD, the peak export year.

• The company's managed run-of-mine coal production was 4 Mt for the quarter ended Sept 30, compared with 5.2 Mt a year ago.

• As at 30 September, 102.9m shares were bought back for $584.5m; There are 318,000 shares remaining to be purchased in order to complete the initial 10% buy-back of issued share capital.

FY23 guidance unchanged

Despite La Niña impacts and labour constraints, management reminded investors the company remains on track to deliver within the range of overall production, sales and cost guidance for FY23, as issued on 25 August 2022.

Whitehaven Coal share price over 12 months.