HALF YEAR RESULT FY2018

Transcription

1 HALF YEAR RESULT FY February 2018 Higher cal prices drive recrd H1 prfit FINANCIAL PERFORMANCE Whitehaven Cal has reprted a net prfit after tax f $257.2 millin fr the half year ended 31 December All key financial perfrmance metrics imprved n the previus crrespnding perid (pcp): Sales revenue f $1,146.4 millin, up by 39% pcp; Operating EBITDA f $460.6 millin rse by 42% n pcp n higher cal prices; Cash generated frm peratins f $409.7 millin, an increase f 55% n pcp; Net debt was reduced t $146.9 millin with gearing falling t 4%; The Bard has reslved t pay an interim dividend f 13 cents per share. OPERATING HIGHLIGHTS Equity ROM cal prductin and sales f cal including purchased cal f 8.4Mt and 9.2Mt, 2% and 18% higher respectively than the pcp reflecting the nging ramp up f Maules Creek mine and slid prductin frm the ther mines in the prtfli. The sales mix fr the half year cmprised 68% high CV thermal, 17% lw CV thermal and 15% metallurgical cal. The higher prprtin f lw CV cal in ttal sales was due t stck reductins which had been built in the final quarter f the previus year. FOB csts f $60/t were cnsistent with guidance fr the half year 1. GUIDANCE ECONOMIC AND SOCIAL CONTRIBUTION During the half year Whitehaven Cal and its Jint Venture partners made significant cntributins t the New Suth Wales (NSW) ecnmy and t lcal ecnmies in NW NSW. A ttal f $116.3 millin paid t the NSW Gvernment in mining ryalties Spending $135.3 millin with lcal businesses, supprting lcal emplyment Making charitable cntributins t ver 40 lcal cmmunity grups Delivering n ur target t ensure at least 10 per cent f the Maules Creek wrkfrce is made up f Abriginal r Trres Strait Islander peple. Cmmenting n the results, Whitehaven Cal Managing Directr and CEO Paul Flynn said: It is pleasing t reprt a recrd first half-year prfit. The result represents the culminatin f a grwth strategy that has been in place fr a number f years. Firstly, the develpment f the Narrabri undergrund mine set the cmpany n a grwth path. This was fllwed by the develpment f the Maules Creek pen cut mine which added significant prductin t the prtfli. At the same time, the successful reductin in csts acrss the entire Whitehaven business and recent higher cal prices have enabled the cmpany t generate this great result. We cntinue t see strng interest frm ptential new custmers thrughut Asia. Many are seeking Whitehaven s high quality cal fr their pwer statins and steel mills either planned, under-cnstructin r newly built. Nw that ur majr capital prgramme is behind us it is pleasing t reward sharehlders with an interim dividend. The dividend pints t the cnfidence that Whitehaven s Bard has in the future prspects f the cmpany. FY2018 guidance fr saleable cal prductin was revised t the range f 20.5Mt t 21.0Mt fllwing reduced prductin frm the Narrabri mine during the first half. Csts fr the year are likely t increase slightly as mdestly higher csts at Narrabri are factred int the result. 1 FOB csts excluding ryalty Fr further infrmatin please cntact Ian McAleese GM Investr Relatins Michael Van Maanen, Media P P

2 FINANCIAL PERFORMANCE H1 FY2018 H1 FY2017 Revenue 1, Net prfit fr the perid Operating EBITDA befre significant items Prfit befre tax REVIEW OF FINANCIAL PERFORMANCE H1 FY2018 NPAT f $257.2m represents an increase f 63% abve the H1 FY2017 reprted NPAT f $157.5m. The increased NPAT result was driven by a 32% increase in per tnne EBITDA margins which rse t $54/t in H1 FY2018 frm $41/t in H1 FY2017. The increased EBITDA margin reflects largely the benefits f higher cal prices in the perid cmbined with cntinuing cst cntrl. The key factrs that cntributed t the increased H1 FY2018 NPAT result include: Strng safety perfrmance. Grss revenue increased by $322.9m t $1,146.4m in H1 FY2018. The increase was driven by the substantial increase in A$ realised prices t an average f A$124/t in H1 FY2018 up frm A$106/t in H1 FY2017. The increase in sales vlumes frm 7.8Mt t 9.2Mt als cntributed. The key drivers f A$ realised prices during the perid include: The Newcastle GlbalCal Index price averaged US$96/t fr the first half, US$15/t higher than the average f US$81/t in the prir crrespnding perid The Grup realised an average price f US$95/t fr all f its thermal cal in the half year. The Grup realised an average price f US$111/t in the first half fr its sales f metallurgical cal prducts. The realised price reflects a cmbinatin f quarterly benchmark linked and index based cntracts The high quality f thermal cal frm the Maules Creek mine typically achieved bth quality and energy premiums relative t the Newcastle GlbalCal Index price during the perid Optimisatin f the prduct sales mix t take advantage f the strng prices fr high quality thermal cal, with little incentive t switch int incremental SSCC vlumes Offset by a strengthened currency the average AUD:USD exchange rate increased t 0.78 in H1 FY2018 frm 0.75 in the prir crrespnding perid; and The increase in prices fr bth thermal and metallurgical cal during H1 FY2018 reflects China s steady draw n the seabrne thermal cal market and strng Asian demand fr high quality cals, reflecting buyant Asian ecnmic cnditins. FOB csts per tnne f A$60 in H1 FY2018 have been held relatively flat with csts in H2 FY2017 but have increased frm A$56/t in H1 FY2017. The cst perfrmance reflects the impact f changes in mix. Specifically, the relative cntributin f Narrabri tnnes (Whitehaven s lwest cst mine) t the Grup s sales mix decreased due t lwer ROM prductin vlumes at Narrabri cmpared with the cntributin frm the pen cut mines. At Maules Creek, csts have been affected by higher strip rati and lnger haul distances, while the Gunnedah pen cuts have cntinued their strng cst perfrmance. Increased Maules Creek prductin has strengthened the prtfli, reducing the impact f Narrabri lngwall change-uts while supprting further imprvement in the utilisatin f cntracted infrastructure capacity n the rail and at the prt. Increased cal purchases t ptimise price margins and maximise the delivery f Whitehaven s high quality thermal cals int high margin sales cntracts. Selling and distributin csts reflect the benefits f a recent renegtiatin f the belw rail capacity cntract with ARTC which resulted in a reductin in track access csts. Decreased administratin csts.

3 CASH FLOW AND CAPITAL MANAGEMENT Cash flw summary H1 FY2018 H1 FY2017 Operating cash flws Investing cash flws (30.2) (34.6) Net free cash flw Financing cash flw (357.7) (197.3) Cash at the beginning f the perid Cash at the end f the perid Capital Management 31 December June 2017 Net debt Undrawn syndicated facility Gearing Rati (net debt/net debt plus equity) (%) 4% 9% Leverage (net debt/ebitda) (times) Cash Flw Operating cash flws Operating cash flws f $399.4m in H1 FY2018 increased by $162.2m r 68% relative t the prir crrespnding perid resulting frm the increased perating EBITDA. Cnversin f EBITDA t cash flw frm peratins was als strng, hwever was adversely impacted by an increase in wrking capital assciated with trade receivables at 31 December 2017 being recrded at higher prices than cmpared with 31 December Investing cash flws Investing cash utflws during H1 FY2018 f $30.2m were flat with the prir crrespnding perid and reflect a cntinuatin f the disciplined apprach being taken t managing capital expenditure. Investing cash flws in H1 FY2018 include sustaining capital expenditure, main rad develpment expenditure at Narrabri and expenditure t prgress the Envirnmental Impact Statement (EIS) required fr the submissin seeking Gvernment apprval fr an expanded Vickery mine (10Mtpa). Capital Management Cash n hand at 31 December 2017 f $98.6m is similar t the cash balance at 30 June Net debt at 31 December 2017 was $146.9m, a decrease f $164.2m frm 30 June Gearing f 4% was reduced by 55% frm the 30 June 2017 gearing rati f 9% due t the reductin in net debt at 31 December The decrease in net debt has been driven by the strng perating cash flw perfrmance during the perid. This has facilitated repayments f the senir facility, finance leases and the ECA facility ttalling $297.6m. Undrawn capacity f $810.0m under the senir bank facility existed at 31 December In Nvember 2017 a sharehlder distributin f $198.4m was made. The sharehlder distributin cmprised a dividends f $59.5m ($0.06 per share) and a capital return f $138.9m (a return f capital f $0.14 per share).

4 SAFETY PERFORMANCE Safety perfrmance acrss the grup cntinued t imprve with Whitehaven s TRIFR f 6.19 recrdable injuries per millin hurs wrked at the end f December imprving frm 7.42 at the end f June This is the lwest ever TRIFR recrded by the cmpany and fllws the intrductin f the Safehaven Rules prgramme in early FY2014. Whitehaven s TRIFR remains well belw the NSW cal mining average f OPERATING PERFORMANCE Cnslidated Equity Prductin and Sales Whitehaven Ttal (000 s t) H1 FY2018 H1 FY2017 Mvement ROM Cal Prductin 8,394 8,192 2% Saleable Cal Prductin 8,263 7,694 7% Sales f Prduced Cal 8,577 7,758 11% Sales f Purchased Cal Ttal Cal Sales 9,232 7,796 18% Cal Stcks at Perid End 1,418 1,171 21% First half FY2018 prductin and sales results demnstrate cntinuing sund peratinal perfrmance. Key highlights include: ROM and saleable cal prductin f 8.4Mt and 8.3Mt were 2% and 7% higher, respectively than the pcp. Cal sales, including purchased cal, f 9.2Mt were 18% higher than the pcp. Cal prductin at Maules Creek cntinues t ramp up with the mine prducing 5.1Mt ROM cal, up 18% n pcp. Slid prductin f 2.2Mt and strng sales f 2.6Mt, up 22% frm the three Gunnedah pen cut mines. A drilling prgramme at Narrabri targeted at determining the displacement f the fault in LW panel 110 cnfirmed a reductin in the displacement f the fault. Decisin taken t mine thrugh the fault in bth LW panels 108 and 109 will increase prductin in bth FY2019 and FY2020 frm previus guidance. Mining recmmenced at the Sunnyside pen cut t fully rehabilitate the site while extracting the remaining 0.8Mt f cal. Mining is planned t be cmpleted in CY2019. Maules Creek Mine Whitehaven 75% and Operatr Maules Creek Mine 100% (000 s t) H1 FY2018 H1 FY2017 Mvement ROM Cal Prductin 5,121 4,355 18% Saleable Cal Prductin 4,560 4,006 14% Sales f Prduced Cal 4,738 4,095 16% Cal Stcks at Perid End (20%) Prductin at Maules Creek cntinued t ramp up n schedule. ROM cal prductin and saleable cal prductin fr the first half was 5.1Mt, up 18% and 4.6Mt, up 14% respectively n the pcp. Cal sales fr the half were a new recrd f 4.7Mt, up 16% n pcp. Metallurgical cal sales fr the first half were 0.9Mt representing 19% f ttal cal sales fr the half. Sales f cntractually cmmitted metallurgical cal frm Maules Creek fr the first half f the year perfrmed as expected. Hwever, demand by steel makers fr uncmmitted semi sft cking cals has been subdued due t high steel demand and margins. These factrs have encuraged steel makers t maximize cke ven prductivity and use higher prprtins f hard cking cal in their cke blends. While steel margins and steel demand cntinue t be rbust we expect sales f uncmmitted metallurgical cal frm Maules Creek will be challenging. Prductin and sales guidance fr FY2018 has been restated with metallurgical cal sales frm Maules Creek likely t be in the range f 20% t 25% f ttal sales. New equipment fr the next step up in prductin is arriving at Maules Creek and is expected t be fully peratinal by July f this year. This equipment will increase capacity at the mine t its fully apprved rate f 13Mtpa ROM cal. ROM cal prductin frm Maules Creek in the secnd half will be higher than in the first half with expectatins f the ttal ROM cal prductin FY2018 reaching 11.0Mt.

5 Narrabri Mine Whitehaven 70% and Operatr Narrabri Mine 100% (000 s t) H1 FY2018 H1 FY2017 Mvement ROM Cal Prductin 3,879 4,222 (8%) Saleable Cal Prductin 3,813 4,088 (7%) Sales f Prduced Cal 3,820 3,990 (4%) Cal Stcks at Perid End % ROM cal prductin fr the first half was 3.9Mt. Saleable cal prductin fr the first half was 3.8Mt and cal sales were 3.8Mt, each mdestly lwer than the pcp. Cal prductin at Narrabri during the first half was impacted by a slwer mining rate thrugh the fault zne in the September quarter while changing rf cnditins in the December quarter accelerated the need fr secndary rf supprt t be installed ahead f previus plans. During the December quarter labur was diverted frm prductin t install additinal secndary supprt leading t a reductin in lngwall prductin. The changed rf cnditins are due t the increasing depth f cver at the mine. Fllwing the success f mining thrugh the fault in lngwall panel LW107, plans have been develped t mine thrugh the fault zne in panels LW108 and LW109. Relative t previus guidance, mining thrugh this zne will reduce csts in bth FY2019 and FY2020 and result in increased ROM cal prductin f 0.3Mt in each year. Prductin guidance fr Narrabri fr FY2018 is in the range f 6.0Mt and 6.5Mt ROM cal. Gunnedah Open Cut Mines Rcglen and Werris Creek 100% wned by Whitehaven and Tarrawnga 70% Open Cuts 100% (000 s t) H1 FY2018 H1 FY2017 Mvement ROM Cal Prductin 2,161 2,313 (7%) Saleable Cal Prductin 2,518 2,132 18% Sales f Prduced Cal 2,628 2,156 22% Cal Stcks at Perid End 1, % The Gunnedah pen cuts Tarrawnga, Rcglen and Werris Creek prduced a ttal f 2.2Mt ROM cal fr the half year 7% lwer than in the pcp. Saleable cal prductin fr the half year was 2.5Mt, 18% higher than the pcp as high cal stcks prduced befre the end f the last financial were prcessed. Cal sales fr the half year were 2.6Mt, 22% higher than the pcp. During the half Whitehaven agreed t acquire Idemitsu s 30% interest in Tarrawnga. The acquisitin is expected t clse in first half f CY2018 fllwing receipt f NSW Gvernment apprval and will add abut 0.6Mtpa t Whitehaven s equity cal prductin effective frm cmpletin. A rehabilitatin prgramme cmmenced at the Sunnyside pen cut mine in the perid. Sunnyside had been n care and maintenance. Mining is expected t be cmpleted in CY2019 and a ttal f 0.8Mt f cal is expected t be mined ver the tw year perid as part f a prgramme t rehabilitate the frmer mining site. Cntemprary rehabilitatin f the mine site will prvide anther example f Whitehaven s excellent capabilities in rehabilitatin. Vickery Whitehaven 100% Whitehaven hsted a visit by the three lcal mayrs and lcal media t Maules Creek during the December quarter t shw key stakehlders its latest tier ne perating mine while prviding attendees with detailed infrmatin in relatin t the Vickery prject. Whitehaven advised attendees that it had remved the Blue Vale pit frm the prpsed Vickery pen cut prject. Subsequent cmmunity feedback in relatin t the annunced change has been psitive. Remval f Blue Vale requires Whitehaven t make changes t the detailed dcumentatin fr the Envirnmental Impact Statement (EIS) fr an expanded Vickery mine (up t 10Mtpa). The EIS remains n target t be submitted during the March quarter. Timing fr start-up f the Vickery prject remains market dependent, but will likely ccur nce Maules Creek has been fully ramped up t its 13Mtpa capacity. Discussins with numerus parties wh have expressed interest in becming jint venture partners will cmmence fllwing the ldgement f the EIS.

6 Explratin Whitehaven has several explratin and ptential develpment prjects in Queensland and New Suth Wales. These are early stage explratin prjects. The Cmpany is fcused n maintaining the tenements in gd standing but is limiting its spending n these prjects. INFRASTRUCTURE Rail Track Whitehaven cntracts its belw rail capacity with the Australian Rail Track Crpratin (ARTC). The capacity framewrk which gverns this cntract has been recently renegtiated until The renegtiatin resulted in a reductin in track access csts. Whitehaven cntinues t wrk with ARTC t expand effective capacity within the Gunnedah Basin withut requiring additinal physical infrastructure thrugh perating efficiency imprvements. The bjective f this wrk is t prvide the capacity required fr Whitehaven s frecast prductin levels ver the cming years in the mst efficient and reliable manner. Rail Haulage Whitehaven has tw rail haulage cntracts, ne with Pacific Natinal and ne with Aurizn. These cntracts bth expire in These cntracts prvide fr the haulage f up t 30Mtpa which allws fr all currently prjected brwnfield expansins. The cmpany is able t align planned increases in saleable cal prductin with cntract rail haulage capacity by giving timely ntice t the rail prviders f the need fr additinal capacity. Prt Capacity Whitehaven hlds cntracts at the Prt f Newcastle at bth NCIG and PWCS cal terminals t supprt planned shipments. Whitehaven will require additinal prt capacity fr the frecast prductin ramp up ver the next 5 years. Currently and fr the freseeable future there is surplus prt capacity available at the prt fr bth shrt term surge and lng term annual requirements. OUTLOOK AND LIKELY DEVELOPMENTS Operatins FY2018 prductin guidance is in the range f 20.5Mt t 21.0Mt. Prductin at Maules Creek will cntinue t prgressively ramp up and reach its fully apprved capacity f 13Mtpa ROM cal by early FY2020. Marketing effrts will cntinue t fcus n delivering cntracted metallurgical cal sales while prductin frm the smaller pen cuts will cntinue at usual rates while sales are likely t exceed prductin as cal stcks accumulated at the end f FY2017 are sld. Demand Buyant ecnmic cnditins acrss the Asian regin and the deplyment f new HELE cal fired pwer statins are maintaining strng demand fr thermal and metallurgical cal in the regin. China s draw n the seabrne cal market has remained well abve market expectatins as small, unsafe and less prductive mines are being clsed r frced t imprve their envirnmental credentials. Cnsumptin in India is als n the rise after a weak start t 2017 and ther cuntries in Suth East Asia cntinue t deply new pwer statins and as urbanisatin cntinues. CRU has estimated that abut 7GW f new cal fired electricity were installed in 2017 requiring an additinal 17Mtpa f cal. In additin, cal cntinues t increase its rle in the electricity mix in Asian cuntries, excluding China, frm an estimated 39% in 2010 t 45% in Further grwth is expected ver the next five years underpinning cal demand. At the same time there is little sign n new cal mine capacity being brught n line. Pricing Thermal cal prices during the December half year perid remained strng and exceeded the expectatins f many cmmentatrs in the lead up t the nrth Asian winter. A number f factrs are helping t maintain these higher prices - China s draw n the seabrne thermal cal market is steady, demand fr higher quality cals frm Suth East Asia and the traditinal Asian markets f Japan, Krea and Taiwan remains strng. The demand frm these cuntries reflects buyant ecnmic cnditins acrss Asia. On the supply side, a number f factrs, including Australian industrial relatins issues and pr weather in Indnesia, has limited the supply respnse. The utlk fr thermal cal in the shrt t medium term remains favurable. Hard cking cal prices have als been strng. The ptential fr weather related disruptins in Queensland in the next tw quarters is expected t result in strng but vlatile prices which will have an impact n demand fr and pricing f Whitehaven s semi sft cking cal prducts.