Whitehaven profit slumps 95% as Australia's coal prices collapse
Whitehaven, one of Australia's largest coal miners, has seen its profits nearly wiped out as coal prices collapse around the world.
Following a record-breaking result a year earlier, Whitehaven on Wednesday said its earnings had crashed 95 per cent from $564.9 million to $30 million in the year to June 30. Shareholders would not receive a final dividend, meaning they earned 1.5¢ a share in the financial year, down from 50¢ in 2019.
A growing number of global fund managers are pledging to exit their investments in thermal coal.Credit:Nic Walker
The profit crash comes as the virus-driven economic downturn weighs on global energy demand and prices of coal, one of Australia's largest export commodity exports. The benchmark price for top-quality New South Wales thermal coal exports has fallen from $US68 a tonne to $US55 in the June quarter, well below the yearly average of nearly $US100 a tonne in the 2019 financial year.
Whitehaven said its full-year result had also been hit by disruptions from summer bushfires, drought, and staffing problems at its flagship Maules Creek mine.
"The year has been a challenging year in so many ways, and COVID-19 has been the icing on the cake," chief executive officer Paul Flynn said on a conference call.
"We've managed a pretty solid year ... but obviously the backdrop here is subdued pricing, no doubt about that, and economic activity in our customers' markets has certainly suffered in the same way as we as an economy have suffered."
Shares in Whitehaven were trading 6 per cent lower on Wednesday morning at $1.17 a share.
The virus-induced price pain in the coal sector comes as thermal coal – the kind used in power plants – faces a rising tide of investor pressure from climate-conscious fund managers seeking to reduce their exposure to fossil fuel on ethical and financial grounds.
BlackRock, one of the world's largest asset managers, has announced a partial retreat from thermal coal investments, citing climate change concerns. Australia's second-largest superannuation fund, First State Super, said it would sell its shares in Whitehaven and other miners that derive more than 10 per cent of their revenue from thermal coal as part of a decarbonisation push across its portfolio.
Mr Flynn on Wednesday said the company was confident in the demand outlook for Whitehaven's comparatively higher-quality coal and its ongoing role "in a more carbon-conscious world".
Under a range of climate policy scenarios, Whitehaven said, its coal would continue to be sought after by large customer markets in Asia due to its higher energy value and lower ash and sulphur content.