Transcription of Finance News Network Interview with Whitehaven Coal Limited (ASX:WHC) Managing Director & CEO, Paul FlynnCarolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Whitehaven Coal Limited
(ASX:WHC) is Managing Director and CEO, Paul Flynn. Paul, welcome back.
Paul Flynn: Thanks for having me Carolyn.
Carolyn Herbert: You’ve just released your first half results for 2017. What were the highlights?
Paul Flynn: There were many and I’ll just go through a few. Our revenue period on period is up about 40 per cent, some $820 million in revenue versus about 570 odd, in the previous corresponding period. Our EBITDA is up substantially, so 106 in the previous corresponding period and now 325 in this half year. So a big step forward there. And our NPAT, which has been a great result, about $8 million last time we spoke 12 month’s ago now, now we’re 158. So almost a factor of 20 there, so quite a result.
Carolyn Herbert: Now to production, how did you perform over the half-year?
Paul Flynn: Production’s been strong. We did have a little bit of wet weather in the first quarter of this half, which gave us a little bit of a challenge. But our plans to recover that volume have gone well. So we’ve ended the year again, year-on-year up and we’re actually looking for a bigger second half. But across the board, Maules Creek ramping up very very well, lots of volume coming out of there. Narrabri beat its last year’s half-year total as well. And our Gunnedah operations, our smaller open cuts have been tracking along quite nicely.
Carolyn Herbert: Are you still on track for your production guidance of 21 to 22 million tonnes?
Paul Flynn: Yes, we’ll get there for sure. We’ll always have a bigger second half than we do the first, which is sort of a little frustrating at times. And this’ll be a little bit bigger again, because of that wet weather in the first half. As I say, those plans are to make sure we can recover those tonnes. Certainly I can see the momentum already in these early months of this second half, and I’m confident we’ll get there.
Carolyn Herbert: Now to sales and pricing. What was split between thermal and metallurgical coal?
Paul Flynn: Well much improved again, met coal’s now up to 20 per cent. Maules Creek, which is the driver of this with this incremental production of the met coal, it’s done about 25 per cent. So it’s done very well and in the second half, we think that’ll go to 32/33 per cent. So that’s a welcome change for us, because we are pushing hard into the metallurgical market. Our cost to produce the met coal is actually only incremental over our thermal costs, but the margin’s far superior for the met coal. So that’s why we’re pushing deeper into that market.
Carolyn Herbert: What sort of average price were you able to achieve during the half, and how does this compare to 2016 prices?
Paul Flynn: The story has been the price, as you’ve said before. So $72 on average we’ve realised the last six months, or the first six months of the last year. Just now we’ve realised an average of $97, so a $25 improvement over where we were before. And that’s driven the margin, so $14 margins, $14/15 in the previous corresponding half. In this half, we’re doing $40/41.
Carolyn Herbert: Commodity prices have definitely surprised people over the last 12 months, in particular. So what’s your view on current and future coal pricing?
Paul Flynn: I think there’s good underlying support for these types of prices that we’re experiencing at the moment. The key to all this is China has embarked on a restructure of its supply side position. And that’s seen significant amounts of tonnes come out over the last six months, from the seaborne trade. Now they’ve gone through their winter, where they’ve sort of turned the volume back up a little bit. But we suspect, now that winter’s passing, they’ll resume this restraint that they’ve shown. And I think that underpins pricing going forward, which is really good to see.
Carolyn Herbert: Finally Paul. What’s the goal for the next six months?
Paul Flynn: We’re going to continue to ramp up Maules Creek, so that’s going from strength to strength. This second half will see us operating about 10.5 million tonnes on an annualised basis, for the balance of this year. Narrabri will transition from its last 300-metre phase, to the larger 400-metre phase. So that will mean extra production and lower cost. Because the volume, as I mentioned, is going to be a little bit bigger in the second half than the first, we should have a stronger financial second half, not just stronger volumes second half.
So I think the next 4.5 months will be interesting. We’ll keep pushing hard and the key is to deliver even further than what we’ve already delivered. And so another couple of hundred million dollars off our financing facilities, which will see us pretty mildly geared by June.
Carolyn Herbert: Paul Flynn, thanks for the update on Whitehaven Coal.
Paul Flynn: Thanks Carolyn, it’s great to be here.
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