• Revenue: Queensland contributed $2 billion, approximately 60% of overall revenues for the first half.
• EBITDA: Total EBITDA for the first half was $960 million, with $588 million from Queensland and $632 million from New South Wales.
• EBITDA Margin: $67 per ton on 14 million tons of sales.
• Average Realized Price: $232 per ton for the first half of fiscal year '25.
• Unit Cost of Production: $137 per ton.
• Net Debt: Reduced to $990 million by the end of the first half from $1.3 billion at the start of fiscal year '25.
• Cash Generated from Operations: $922 million.
• Capital Expenditure: $245 million in CapEx and other acquisition costs.
• Dividend: $0.09 fully franked dividend declared.
• Buyback: An equally sized buyback to be executed over the next six months.
• Payout Ratio: 44% of the underlying group NPAT for the half year, including the buyback.

• Warning! GuruFocus has detected 9 Warning Signs with WHITF.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Whitehaven Coal Ltd (WHITF) reported strong financial performance with a significant EBITDA contribution from Queensland, amounting to $588 million.
• The company achieved a $67 per ton margin on 14 million tons of sales, reflecting attractive profitability.
• Whitehaven Coal Ltd (WHITF) is on track to reduce costs in Queensland by $100 million per annum by the end of the financial year, driven by operational efficiencies.
• The company declared a $0.09 fully franked dividend and announced a share buyback, reflecting a commitment to returning capital to shareholders.
• Whitehaven Coal Ltd (WHITF) maintained a strong balance sheet with net debt reduced to $990 million, supported by solid cash generation from operations.

Negative Points

• The company is experiencing higher costs in New South Wales due to current mine sequencing and higher-strip ratios, impacting profitability.
• Additional port and loading charges in New South Wales are increasing costs by $4 per ton, affecting the cost base until debt amortization is completed.
• The closure of Werris Creek and moderated volumes from existing mines have led to increased unit costs due to underutilized take or pay costs on rail and port.
• Whitehaven Coal Ltd (WHITF) faces challenges with weather conditions potentially impacting cost guidance and operational performance.
• The company is dealing with the complexities of integrating new assets and systems, which may pose operational and financial challenges in the short term.

Q & A Highlights

Q: Can you explain the reasoning behind maintaining conservative unit cost guidance despite a strong first half? A: Paul Flynn, CEO, explained that the guidance was set conservatively due to the doubling of the business and the integration of new assets. Weather conditions also contribute to maintaining a cautious outlook.

Q: How flexible is Whitehaven Coal in shifting its product mix between thermal and metallurgical coal? A: Paul Flynn, CEO, stated that the company has significant flexibility in New South Wales to switch between semi-soft and thermal coal, depending on market conditions. Vickery's semi-soft coal is expected to be in demand, but economic factors will guide the decision.

Q: What is the rationale behind the recent share buyback decision? A: Kevin Ball, CFO, highlighted that the buyback was driven by the attractive valuation of the company's shares, trading at a discount to NAV. The strong balance sheet and robust market outlook supported this decision.

Q: How does Whitehaven Coal view the current thermal coal market dynamics, especially with recent price declines? A: Paul Flynn, CEO, noted that while there has been a recent increase in production, consumption remains strong. Contracted positions are stable, and the company expects the market to adjust over time.

Q: What are the main areas of focus for cost reduction initiatives in Queensland? A: Ian Humphris, Executive General Manager - Operations, mentioned that there are numerous initiatives, including improving maintenance and optimizing explosives usage. The focus is on a broad range of operational efficiencies.

Q: How does the company plan to use the proceeds from the 30% sale of Blackwater? A: Kevin Ball, CFO, explained that the proceeds will strengthen the balance sheet and support financial stability over the next two years, rather than being earmarked for immediate distribution.

Q: What is the outlook for capital allocation, particularly regarding dividends and buybacks? A: Paul Flynn, CEO, indicated that the capital allocation framework will be reviewed and updated at the end of the fiscal year, considering the company's de-risked balance sheet and strong cash generation.

Q: How does Whitehaven Coal view potential M&A opportunities in the current market? A: Paul Flynn, CEO, stated that there are no current M&A targets of interest. The focus remains on maximizing the value of recent acquisitions and improving existing operations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.