Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY23 Earnings Presentation
47 slides from Whitehaven Coal's earnings presentation, Feb 16, 2023
Slide 1: Half Year Results FY23
Half Year Results FY23 16 February 2023 Authorised for release by the Board of Whitehaven Coal Limited Investor contact Media contact Kylie FitzGerald Michael van Maanen +61 2 8222 1155, +61 401 895 894 +61 2 8222 1171, +61 412 500 351 kfitzgerald@whitehavencoal.com.au mvanmaanen@whitehavencoal.com.
Slide 2: Contents and Disclosure
Contents Disclosure FORWARD LOOKING STATEMENTS 1. Whitehaven Coal’s Markets Statements contained in this material, particularly those regarding the possible or assumed future performance, costs, dividends, returns, production levels or rates, prices, reserves, potential growth of Whitehaven Coal Lim
Slide 3: H1 FY23 highlights
H1 FY23 highlights Structural shortfall in Solid Narrabri Record $2.7b H1 $1.1b of taxes global energy markets operational and royalties paid underpinning prices for high-CV performance. Weather EBITDA and $1.8b H1 or payable for H1 FY231 coal and record realised interruptions at open cut mines NPAT
Slide 4: Whitehaven Coal's Markets
Whitehaven Coal’s Markets
Slide 5: Premium products delivered into premium markets
Premium products delivered into premium markets Europe 2 8.4M tonnes managed sales volumes in H1 FY23 Europe Malaysia 2% 5% 1 11 Japan Other¹ 6% 1 4 Korea Taiwan 8% - 2 Taiwan Malaysia - 1 Korea Japan 11% 68% 1 1 Vietnam Indonesia 2 2 New Caledonia 2 Metallurgical Coal Customers Premium Asian market
Slide 6: Producing the highest quality seaborne thermal coal
Producing the highest quality seaborne thermal coal 97% of our thermal coal exports >5600 kcal; overall average energy content of ~6100 kcal in CY22 Percentage of thermal coal exports by quality – CY22 100% H1 FY23 quality outcomes 90% kcal/kg NAR1 80% • In H1 FY23, 77% of Whitehaven’s >6200 coal ex
Slide 7: Providing energy security for our customers
Providing energy security for our customers Our coal provides a significant proportion of electricity to our key customer countries totalling ~39 TWh annually Contribution to baseload electricity from WHC managed coal supplied into Japan, South Korea & Taiwan (JKT) Japan South Korea Taiwan WHC coal
Slide 8: Strong demand forecast, but supply gaps emerge
With reliable energy required for transition, strong demand is forecast, but supply gaps emerge Wood Mackenzie’s forecast demand for seaborne thermal • Wood Mackenzie forecasts global coal relative to supply (operating, probable and possible) demand to largely remain flat to 2030. Advanced economies
Slide 9: Forecasting strong demand for seaborne thermal coal
Wood Mackenzie is not alone in forecasting strong demand for seaborne thermal coal Forecast demand curves for seaborne thermal coal to 2040 • We consider several external 1200 demand forecasts AME Wood Mackenzie CRU • AME is forecasting demand for 1000 seaborne thermal coal in 2040 of ~850Mt, which
Slide 10: Asian demand for metallurgical coal forecast to grow
Asian demand for metallurgical coal is forecast to grow by 33% over the next three decades Asia seaborne demand for metallurgical coal Asia seaborne demand by metallurgical coal type 350 200 Million Tonnes Million Tonnes 197.9 300 160 Malaysia 250 Taiwan 146.9 Vietnam Seaborne Imports - HCC Indonesi
Slide 11: Thermal coal prices (US$/t)
Thermal coal prices (US$/t)1 Strong demand and tight supply underpin thermal coal prices $500 Russia invades Ukraine Indonesian export • Tight global coal supply for $400 ban energy continues to provide underlying support for HCV coal China bans Australian coal prices despite mild northern $300 impo
Slide 12: Metallurgical coal prices (US$/t)
Metallurgical coal prices (US$/t)1 China’s reopening to Australian coal is supporting higher prices $700 $600 Price strengthening reflects: $500 • Improving global steel market in CY23 as economies recover from $400 depressed steel demand in CY22 $300 • Good demand for Australian metallurgical coal
Slide 13: H1 FY23 external market drivers
H1 FY23 external market drivers Strong demand, supply constraints and weather impacts drove record prices Supply & demand Weather events Record gC NEWC Labour constraints, factors • Weather events in H1 prices and inflation • Strong demand for all fuel FY23 impacted NSW and • WHC’s achieved thermal
Slide 14: H1 FY23 Results
H1 FY23 Results
Slide 15: Safety performance
Safety performance Safety is as important as ever 25 20.0 20 ROM coal production (Mt) 15 and TRIFR Whitehaven recorded a 12 month TRIFR for 10 employees and 5.2 contractors of 5 5.2 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 H1 as at 31 December 2022 FY23 ROM coal produc
Slide 16: H1 FY23 financial highlights
H1 FY23 financial highlights Record coal prices and solid Returning capital production underpin record earnings to shareholders Achieved coal price1 NPAT Interim franked dividend2 A$552 / tonne $1.8 billion 32 cents to be paid 10 March 2023 Revenue Cash generated by operations Total returns to share
Slide 17: ROM coal production and sales
ROM coal production and sales Strong Narrabri performance; weather-affected volumes from open cut mines Whitehaven Managed ROM Coal Production (Mt) Whitehaven Managed Coal Sales (Mt) 11.6 10.2 0.3 8.8 8.6 8.4 8.4 6.3 0.9 0.4 5.3 3.9 3.6 4.9 4.3 2.9 3.6 2.9 3.0 1.9 1.8 2.5 1.5 1.7 1.7 1.3 1.3 H1 FY22
Slide 18: Maules Creek
Maules Creek Impacted by weather events and labour shortages Managed ROM coal production (Mt) • H1 FY23 managed ROM production 3.9Mt, 21% below H1 FY22 of 4.9Mt • Regional and localised flooding impacts from La Niña hampered FY23 guidance 10.3 – 11.0Mt production particularly in the Dec- quarter, co
Slide 19: Narrabri
Narrabri Strong operational performance in H1 FY23 Managed ROM coal production (Mt) • H1 FY23 managed ROM production 3.6Mt, 85% above H1 FY22 of 1.9Mt • Strong operational Guidance range performance and improved 5.6 – 6.0Mt conditions in LW110 • Good coal quality in H1 FY23 7.7 6.9 7.3 6.4 6.3 6.1 4
Slide 20: Narrabri longwall move
Narrabri Next longwall move takes mining to shallower ground in LW203 from LW110B • The longwall move to shallower ground in LW203 is expected around April 2023 with improved conditions expected • Cut & Flit to provide incremental volumes but affected by labour constraints. 20
Slide 21: Gunnedah open cuts
Gunnedah open cuts High quality but volumes impacted by weather and labour constraints Managed ROM coal production (Mt) • H1 FY23 ROM production 1.3Mt, 13% below H1 FY22 reflecting wet weather impacts • Rain impacts restricted road access to Tarrawonga (17 days) and haulage to the coal handling and
Slide 22: Financial history
Financial history Record H1 earnings and cash generation Revenue ($m) EBITDA ($m) NPAT (before significant items) ($m) H1 FY23 3,809.2 H1 FY23 2,653.3 H1 FY23 1,782.0 H1 FY22 1,443.0 H1 FY22 632.6 H1 FY22 340.5 FY22 4,920.1 FY22 3,060.1 FY22 1,952.0 FY21 1,557.0 FY21 204.5 FY21 (87.3) FY20 1,721.6 F
Slide 23: EBITDA margin
EBITDA margin Driven by strong and enduring global demand for high quality coal H1 FY23 H1 FY22 Coal sales (equity basis, excluding purchased coal) Mt 6.4 6.3 Average revenue (excluding purchased coal & net of royalties) A$/t 510 185 Average cost of sales A$/t 96 83 EBITDA margin on own coal sales A
Slide 24: H1 FY23 EBITDA vs H1 FY22
H1 FY23 EBITDA vs H1 FY22 $m (86) 13 19 281 FX H1 FY23 H1 FY22 AUD:USD 0.67 0.73 1,793 Achieved Prices H1 FY23 H1 FY22 2,653 Thermal (US$/t) 381 146 Metallurgical (US$/t) 285 155 Overall (A$/t) 552 202 633 H1 FY22 Price (net of royalty) FX Sales Volume Costs Other H1 FY23 24
Slide 25: H1 FY23 unit costs vs H1 FY22
H1 FY23 Unit costs $A/t vs H1 FY22 7 $/t (4) 4 6 96 83 H1 FY22 Impact of flooding Yield NCIG accelerated debt Other (incl. diesel & H1 FY23 amortisation labour) Cyclical / seasonal Strong Narrabri Inflationary cost performance pressures 25
Slide 26: Strong cash generation to end the half at $2.5b net cash
Strong cash generation to end the half year at $2.5b net cash $m (149) (945) 1 (18) 0 2545 2471 1,038 30-Jun-22 Net cash from operating Investing Returns to shareholders Repayments & Other 31-Dec-22 activities 26 1. Includes a share trade entered into on 30 June 2022 for $3.6 million that was settle
Slide 27: Uses of $2.47 billion net cash
Uses of $2.47 billion net cash Net cash retained for income tax, dividends, buy-backs and growth $m (552) (766) 2,471 (274) 879 Net cash as at FY22 income tax Income tax accrued FY23 interim dividend Net cash after income tax 31 December 2022 (payable late Feb-23) in respect of FY23 and capital retu
Slide 28: Net cash and liquidity
Net cash and liquidity $m 31 Dec 2022 30 Jun 2022 Net cash outlook Cash on hand 2,626.5 1,215.5 • Continued strong cash generation Senior secured bank facility (drawn) - - expected underpinned by demand for high quality coal and tight supply ECA1 (43.5) (48.2) • Disciplined capital allocation Financ
Slide 29: Capital allocation in H1 FY23
Capital allocation in H1 FY23 Capital used to build balance sheet strength and provide returns to shareholders Operating cash flows 36% NPAT payout ratio Maintain & optimise Retain cash / maintain Return to shareholders including interim dividend of $274m and $367m operations balance sheet strength
Slide 30: Return 20% to 50% of NPAT through dividends and buy-backs
We aim to return between 20% and 50% of NPAT to shareholders through dividends and buy-backs Payout ratio Capital returned to shareholders ($m) Capital allocated to shareholders ($m) (% of NPAT1) 2 3 H1 FY23 959.3 H1 FY23 273.7 367.4 641.1 36% FY22 442.4 FY22 446.3 587.9 1034.2 53% FY21 0.0 FY21 0.0
Slide 31: FY23 Guidance
FY23 Guidance
Slide 32: FY23 guidance
FY23 guidance FY22 H1 FY23 FY23 Key elements Comments actual actual Guidance Managed ROM Coal Production Mt 20.0 8.8 19.0 – 20.4 Maules Creek Mt 11.2 3.9 10.3 – 11.0 Narrabri Mt 4.8 3.6 5.6 – 6.0 Gunnedah Open Cuts Mt 4.0 1.3 3.1 – 3.4 Managed Coal Sales Mt 17.6 8.0 16.5 – 18.0 Excluding purchased c
Slide 33: Market outlook
Market outlook Near-term Whitehaven’s FY23 focus • Russian sanctions, weather impacts, and coal reservation policy • Ongoing strengthening of safety, exacerbating supply constraints environmental and sustainability outcomes • Mild northern hemisphere winter has seen a retreat from record high prices
Slide 34: Appendices
Appendices
Slide 35: Gunnedah Basin and expanding to Bowen Basin
Gunnedah Basin and expanding to Bowen Basin Whitehaven is the largest independent producer of high-CV coal in Australia 35
Slide 36: Our portfolio of assets presents options to grow
Our portfolio of assets presents options to grow Our long-life assets are providing high-quality coal and energy security through the transition 2023 2024 2025 2026 2027 2028 2029 2030 2040 Production1 & LOM Current production Werris Werris Creek ~1.5 Mtpa Creek to finish in 2024 Current production
Slide 37: Our coal is of the highest quality
Our coal is of the highest quality With seven new USC units coming on line between 2022 and 2024 in Japan and South Korea, Whitehaven’s coal will play a critical role meeting energy needs and supporting decarbonisation CO2 Emissions of sent out energy generation by coal fired power plants (t CO2 / M
Slide 38: Focused on Scope 1 and 2 emissions and TCFD reporting
• Scope 1 emissions primarily from Focused on Scope 1 and 2 Narrabri fugitive emissions and Maules Creek diesel consumption emissions and TCFD reporting – Improved reporting accuracy for Maules Creek since FY21 through use of site specific fugitive emissions (versus NGER Greenhouse gas emissions def
Slide 39: Scope 1 emissions by source
Scope 1 emissions by source Our Scope 1 emissions are predominantly fugitive emissions from Narrabri and diesel from Maules Creek Scope 1 emissions by facility Scope 1 emissions by source 520 FY21 FY22 1% Other 384 k tonnes CO2e 305 266 Diesel Fugitive consumption emissions 42% 57% 65 67 47 49 13 10
Slide 40: Highly engaged people and communities
Highly engaged people and communities Social and environmental impacts reported annually in our Sustainability Report Approx. 75% 10.6% 15.3% 3% increase in of 2,500-strong of employees female employee employee engagement workforce based in identify as Aboriginal participation in our scores to 6.3 o
Slide 41: Profit and Loss
Profit and Loss $m H1 FY23 H1 FY22 Revenue 3,809.2 1,443.0 Other income 4.9 1.5 Operating expenses (381.8) (321.8) Coal purchases (257.0) (194.6) Rail, port, marketing and royalties (477.6) (271.3) Admin and other expenses (including net FX gain/loss) (44.4) (24.2) EBITDA 2,653.3 632.6 Depreciation
Slide 42: Strong coal prices achieved in H1 FY23
Strong coal prices achieved in H1 FY23 WHC’s achieved thermal coal WHC’s thermal coal price WHC’s overall achieved price (US$/t) premium / discount to gC NEWC (%) coal price (A$/t) H1 FY23 381 -5% H1 FY23 H1 FY23 552 H1 FY22 146 -17% H1 FY22 H1 FY22 202 FY22 239 -4% FY22 FY22 325 FY21 68 -14% FY21 F
Slide 43: Costs
Costs Unit cost calculation The unit cost can be calculated off the face of the P&L. It includes operating H1 FY23 Costs expenses, selling & distribution expenses, administration expenses (net of sundry revenues) and share-based payment expenses. Logistics, Labour, Coal purchases, royalties, depreci
Slide 44: D&A and net finance income/(expense)
D&A and net finance income/(expense) H1 FY23 H1 FY22 Drivers Depreciation & amortisation $109.7m $119.0m Reflects decrease in ROM production at open cuts vs pcp D&A per tonne (sales of own coal) $17/t $19/t Net finance income/(expense) $4.6m ($28.0m) Interest earned on cash balance partly offset by
Slide 45: FY23 capital expenditure guidance
FY23 capital expenditure guidance FY22 H1 FY23 FY23 Key elements Comments actual actual guidance $10m - $13m environmental & regulatory Open Cuts $m 69 33 67 - 88 $39m - $46m fleet overhauls $18m - $29m sustaining / productivity $31m - $35m sustaining / productivity $10m - $12m environmental / regul
Slide 46: Capital allocation framework
Capital allocation framework Disciplined capital allocation to build resilience and deliver shareholder value Operating cash flows 1 2 3 ~20%-50% NPAT payout Maintain & optimise Retain cash / maintain Return to shareholders ratio for distributions dividends and operations balance sheet strength Divi
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