Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY2022 Earnings Presentation
35 slides from Whitehaven Coal's earnings presentation, Feb 17, 2022
Slide 1: Half Year Results FY22
Half Year Results FY22 17 February 2022 Authorised for release by the Board of Whitehaven Coal Limited Investor contact Media contact Sarah McNally Michael van Maanen +61 2 8222 1155, +61 477 999 238 +61 8222 1171, +61 412 500 351 smcnally@whitehavencoal.com.au mvanmaanen@whitehavencoal.com.au White
Slide 2: Contents and Disclosure
Contents Disclosure FORWARD LOOKING STATEMENTS 1. Whitehaven’s market 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 Limited,
Slide 3: Whitehaven's Market
Whitehaven’s Market
Slide 4: Whitehaven's customer base
Whitehaven’s customer base Our coal products are used: 3 10 Japan 1. In high efficiency, low emission (HELE) 2 6 Korea electricity generation 1 2 Taiwan India 2 2 2. to make steel; and 1 1 Vietnam 3. in nickel smelting and - 1 Philippines Malaysia - 1 other industrial applications Indonesia 3 - 1 Ne
Slide 5: Premium products delivered into premium markets
Premium products delivered into premium markets End users increasingly prefer high quality, high-CV thermal coal Sales to thermal coal Sales to metallurgical coal customers 7.1Mt customers 1.4Mt H1 FY22 H1 FY22 • We produce and sell high quality coal products into Other Other Taiwan 8% premium Asian
Slide 6: Thermal coal prices (US$/t)
Thermal coal prices (US$/t)1 300 250 December 2021 rebound a combination of strong 200 Asia based end user demand and production 150 constraints due to wet weather and flooding in 100 the Hunter Valley and 50 Gunnedah Basin 0 gC NEWC US$/t API 5 US$/t 1 Average weekly price 6
Slide 7: Current coal market dynamics
Current coal market dynamics Record gC NEWC Demand factors Impact of COVID Impact of weather prices • Strong demand for • COVID is events • Coal prices well all fuel types. Coal adversely • Weather events supported given remains impacting labour across the NSW strong underlying competitively availab
Slide 8: Forecast seaborne thermal coal demand & pricing
Forecast seaborne thermal coal demand & pricing High-rank thermal coal seaborne imports by country (Mt) 6000 CV NEWC thermal coal price forecast FOB (US$/t, real 2021) 700 700 160 600 600 140 120 500 500 US$/t, real 2021 100 400 400 80 300 300 60 200 200 40 100 100 20 0 0 0 2021 2025 2030 2035 2040
Slide 9: Whitehaven helps customer countries meet emission targets
Whitehaven plays an important role in helping customer countries meet their emission targets The benefits of using Whitehaven coal products: High-CV coal Helps customers Decreases the ash requires less coal to meet strict byproduct of the to be used to sulphur and generation process produce energy n
Slide 10: H1 FY22 Results
H1 FY22 Results
Slide 11: Safety performance
Safety performance Safety is always a key focus for Whitehaven 25 20 ROM coal production (Mt) 15 and TRIFR Whitehaven recorded 10 a TRIFR of 6.1 5 as at 31 December 2021* 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 H1 FY22 ROM coal production (Mt) Total Recordable Injury Frequ
Slide 12: H1 FY22 highlights – a record half
H1 FY22 highlights – a record half Record half year earnings Declared interim unfranked dividend Record achieved coal prices1 Record NPAT 8 cents A$202/t $340.5m To be paid Record Revenue Record cash generated by operations 11 March 2022 $1,443m On-market share buyback2 $567.4m Record EBITDA up to $
Slide 13: ROM coal production and sales
ROM coal production and sales Whitehaven Managed ROM Coal Production (Mt) Whitehaven Managed Coal Sales (Mt) 14 14 12 12 10.9 10.5 10 9.6 10 1.0 9.3 8.4 8.6 1.1 8 8 0.9 5.2 7.4 4.6 6 4.9 6 5.0 4.3 4 4 2.9 2.6 1.4 1.9 1.6 1.8 2 2 1.8 2.1 2.0 1.6 1.7 1.5 0 0 H1 FY21 H2 FY21 H1 FY22 H1 FY21 H2 FY21 H1
Slide 14: Maules Creek
Maules Creek Impacted by weather events Managed ROM coal production (Mt) FY22 guidance • H1 FY22 managed ROM production 11.3 – 11.7Mt 4.9Mt, 5% below H1 FY21 of 5.2Mt • Heavy rainfall at the end of 2021 resulted in road access to the mine cut for up to 2 weeks. Flooding is 11.7 12.7 estimated to hav
Slide 15: Narrabri
Narrabri Scheduled longwall changeout Managed ROM coal production (Mt) • H1 FY22 managed ROM production 1.9Mt, 26% below H1 FY21 of 2.6Mt due to the FY22 guidance scheduled longwall relocation 4.3 – 5.0Mt from panel 109 to 110 during 7.7 7.3 December 2021 6.9 6.3 6.4 6.1 4.1 1.9 FY15 FY16 FY17 FY18
Slide 16: Narrabri near term mine plan
Narrabri Near term mine plan • Cut and flit mining commenced on panels 201 and 202 in January • The scheduled longwall step around from panel 110A to panel 110B will commence in June 2022 • The next longwall move from panel 110 to 203 is scheduled for H2 FY23. This will see the return to mining in s
Slide 17: Gunnedah open cuts
Gunnedah open cuts Impacted by weather events Managed ROM coal production (Mt) • H1 FY22 managed ROM production 1.5Mt, 14% below H1 FY21 of 1.8Mt • Rain events at the end of 2021 FY22 guidance restricted road access to Tarrawonga 3.4 – 3.8Mt and between Tarrawonga and the coal handling and preparati
Slide 18: Financial headlines
Financial headlines Record earnings Profit and Loss ($m) H1 FY22 H1 FY21 Comment EBITDA 632.6 37.2 Refer to slide 20 Net profit/(loss) after tax 340.5 (94.5) Cash generated from operations 567.4 54.9 Declared dividends (cps) 8 - Average achieved coal price (A$/t)1 202 81 Unit cost per tonne ($/t) 83
Slide 19: Profit and Loss
Profit and Loss Financial performance – A$ millions H1 FY22 H1 FY21 Revenue 1,443.0 699.3 Other income 1.5 1.6 Operating expenses (321.8) (362.9) Coal purchases (194.6) (65.9) Rail, Port, Marketing and Royalties (271.3) (209.4) Admin and other expenses (including net FX gain/loss) (24.2) (25.5) EBIT
Slide 20: EBITDA vs pcp
EBITDA vs pcp FX H1 FY22 H1 FY21 $m AUD:USD 0.73 0.72 800 (17) (6) 700 (80) (7) 600 Achieved Prices H1 FY22 H1 FY21 500 Thermal (USD/t) 146 55 Metallurgical (USD/t) 155 75 400 706 633 300 200 100 37 - H1 FY21 Price (net of royalty) FX Sales Volume Costs Other H1 FY22 20
Slide 21: Achieved thermal coal price (USD/t) vs pcp
Achieved thermal coal price (USD/t) vs pcp Reflects a portion of Whitehaven’s thermal coal sales book priced in prior periods and sales of higher ash coal 21
Slide 22: Unit costs $A/t vs pcp
Unit costs $A/t vs pcp Product quality strategy Underlying cost inflation Temporary cost drivers 22
Slide 23: EBITDA margin
EBITDA margin Driven by strong and enduring global demand for fuel H1 FY22 H1 FY21 Coal Sales (equity basis, excluding purchased coal) Mt 6.3 7.8 Average revenue (excluding purchased coal & net of royalties) $A/t 185 75 Average cost of sales $A/t 83 70 EBITDA Margin on own coal sales $A/t 102 5 EBIT
Slide 24: D&A and net finance expense
D&A and net finance expense H1 FY22 H1 FY21 Drivers Depreciation & amortisation $119.0 $138.2 • Reflects the impact of 30 June 2021 impairment and decrease in ROM production vs pcp D&A per tonne (sales of own coal) $18.9/t $17.8/t • Increase in per tonne due to fixed component over less tonnes Net f
Slide 25: Net debt and liquidity
Net debt and liquidity 31 Dec 2021 30 Jun 2021 $m $m Net debt outlook Senior secured bank facility (drawn) 320.0 688.0 • Subsequent to 31 December 2021 a ECA1 52.9 58.0 further $225m has been repaid on the Finance leases 154.2 173.9 senior secured bank facility Cash on hand (106.8) (95.2) • Continue
Slide 26: Free cash flow
Free cash flow During H1 FY22 the majority of free cash flow was used to retire debt H1 FY22 operating cash flows1 $530m Debt retirement Investing Lease payments Other $391m $93m $40m $6m • Senior debt and ECA net • Includes: • Primarily fleet equipment repayments 1. $26m sustaining capex, • An addi
Slide 27: Capital allocation
Capital allocation Maintaining a strong balance sheet and delivering value to shareholders Whitehaven’s capital allocation framework prioritises: • Maintaining safe and reliable operations • BB/Ba2 credit rating • Returns to shareholders - ordinary dividend and/or share buyback programmes • Establis
Slide 28: FY22 Guidance
FY22 Guidance
Slide 29: FY22 guidance
FY22 guidance No change since update to market on 21 January 2022 FY21 H1 FY22 FY22 Key elements Comments actual actual guidance issued Managed ROM Coal Mt 20.6 8.4 19.0 – 20.5 Production Maules Creek Mt 12.7 4.9 11.3 – 11.7 Weighted to the second half Longwall change-out Q2 FY22 and mid-panel Narra
Slide 30: FY22 focus
FY22 focus • Improving safety performance • Delivering FY22 guidance • Maximising profit margins • Delivering value to shareholders • Managing impacts of Omicron across the coal supply chain 30
Slide 31: Appendices
Appendices
Slide 32: 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 32
Slide 33: Unit cost calculation
Unit cost calculation The unit cost can be calculated off the face of the P&L. It includes operating expenses, selling & distribution expenses, administration expenses (net of sundry revenues) and share based payment expenses. Coal purchases, royalties, depreciation & amortisation, FX and significan
Slide 34: FY22 capital expenditure guidance
FY22 capital expenditure guidance No changes FY22 FY21 H1 FY22 Key elements guidance Comments actual actual issued Sustaining Capital $m 61 47 95 - 115 $30m - $35m Fleet overhauls $35m - $40m sustaining /productivity $10m - $15m Water, environmental & biodiversity $20m - $25m Establishing mining pre
Slide 35: Growth opportunities and optionality
Growth opportunities and optionality Whitehaven has multiple options to grow its business of long-life mines Assets Approved Production1 LOM • Mine ramping up to 16Mtpa ROM with the roll out of AHS2, Maules Creek 13Mtpa ROM >30 years commencement of in-pit dumping and 16Mtpa modification application