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Whitehaven Coal Profits Plummet But Transformation to Met Coal Giant Takes Shape

Whitehaven Coal’s net profit after tax nosedived 86% year-on-year to A$257.6 million (US$166.8 million) in the first half of FY 2024. While revenue also dropped significantly (58%), the decline was partly due to integrating the upcoming Blackwater and Daunia acquisitions, a key move in their transformation to a major metallurgical coal producer.

Key takeaways:

  • Net profit: A$257.6 million (H1 FY 2024), down from A$2.66 billion (FY 2023).
  • Revenue: A$1.58 billion (H1 FY 2024), down from A$6.06 billion (FY 2023).
  • Reason for decline: Lower thermal coal prices, acquisition-related expenses, and exhausting reserves at Werris Creek mine.
  • Transformation: Acquiring Blackwater and Daunia mines expected to shift revenue structure to 70% met coal, 30% thermal coal (currently 10% and 90%, respectively).
  • Production: Steady guidance of 18.7-20.7 million tonnes (run-of-mine) and 16.0-17.5 million tonnes (managed sales) for FY 2024.
  • Outlook: First revenue from Vickery thermal coal mine expected later in 2024, offsetting Werris Creek closure.
  • Financial strength: Net cash of A$1.5 billion and access to US$1.1 billion credit facility.

CEO Paul Flynn emphasized the progress on acquiring Blackwater and Daunia, calling it a “transformation well underway.” He acknowledged the decline in profits but attributed it to factors like lower thermal coal prices and strategic investments.

Despite the profit drop, Whitehaven remains financially strong and focused on becoming a major player in the met coal market. The integration of Blackwater and Daunia, combined with the Vickery project, positions them for significant growth in this sector.