The Whitehaven Coal Ltd (ASX: WHC) share price was up around 5% today following the release of their June quarterly report. Here’s what you need to know.
About Whitehaven
Whitehaven Coal is Australia’s leading producer of premium thermal and metallurgical coal and has five mines throughout New South Wales that employ over 2,000 people.
Quarterly Report Highlights
- Coal production was up 25% on the previous corresponding period (pcp) to 7.3Mt
- Full-year coal production was 23.2Mt, exceeding previous guidance
- Total Recordable Injury Frequency Rate (TRIFR), which measures the company’s safety performance, improved significantly from 8.3 to 6.16
- Saleable coal production of 5.2Mt was up 9% on pcp
Year-to-date, coal production is up 1% while total coal sales have fallen 2%.
Run-of-mine (ROM) coal production beat FY19 guidance, while saleable coal production fell short of guidance by 0.7Mt. The outcome of FY19 costs has not yet been reported but guidance was for $67 per tonne.
Outlook
Whitehaven reported that thermal coal markets have softened due to low seaborne LNG prices in Europe and Asia, Chinese import restrictions and trade tensions from the US-China trade war.
Low gas prices in Europe have led some power generators to switch from coal to gas, reducing demand for coal.
Coal imports from China have been declining and as a result sales from Australia into China fell throughout the first half of the calendar year 2019.
The quarterly report pushed the Whitehaven share price as much as 5% higher today, but overall the outlook seems uncertain and reliant on a number of key factors, including coal prices and trade tensions.
I prefer to avoid price-taking businesses that rely on commodity prices. I’d rather invest in one of the businesses mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
