Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — FY2018 Earnings Presentation
40 slides from Whitehaven Coal's earnings presentation, Aug 14, 2018
Slide 1: Whitehaven Coal Limited Full Year Results FY2018
WHITEHAVEN COAL LIMITED AUSTRALIA’S LEADING HIGH QUALITY COAL COMPANY FULL YEAR RESULTS FY2018 14 AUGUST 2018
Slide 2: Disclosure
DISCLOSURE 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, INDUSTRY GROWTH OR OTHER TREND PROJECTIONS AND ANY ESTIMATE
Slide 3: Agenda
AGENDA – Highlights – Safety Performance – Financial Performance – Operations – Community – Outlook for Coal Use – Outlook for Whitehaven – Appendices 3 // FULL YEAR RESULTS FY2018
Slide 4: Highlights
HIGHLIGHTS HIGHLIGHTS RECORD FULL YEAR PROFIT Safety improved with the Record full year net profit of TRIFR declining to 6.9 at 30 $525.6 million up 30% June Equity coal sales of 17.4Mt Record EBITDA of $940.0 including purchased coal million up 32% on pcp A final dividend of $0.27ps Gearing of 7% a
Slide 5: Safety Performance
SAFETY PERFORMANCE SAFETY PERFORMANCE IMPROVING SAFETY PERFORMANCE – Whitehaven’s safety performance has Whitehaven Group TRIFR & Saleable Coal Production (Mt) continued to improve as production 25 has increased 20 – The successful implementation of the “Safehaven Rules” programme and 15 ongoing rei
Slide 6: Financial Performance
FINANCIAL PERFORMANCE
Slide 7: Financial Highlights
FINANCIAL PERFORMANCE FINANCIAL HIGHLIGHTS RECORD FULL YEAR PROFIT AND STRONG CASH FLOW Profit and loss FY2018 FY2017 Comment Net profit after tax ($’m) including significant items 525.6 405.4 – Up 30%, record full year profit Underlying EBITDA before significant items ($’m) 940.0 714.2 – Before cor
Slide 8: Record Full Year Profit
FINANCIAL PERFORMANCE RECORD FULL YEAR PROFIT HIGHER COAL PRICES AND SALES FLOWING DIRECTLY TO RESULTS Financial Performance - A$ millions FY2018 FY2017 Revenue 2,257.4 1,773.2 Other income 6.8 7.7 Operating expenses (839.2) (589.1) Rail, Port, Marketing and Royalties (NSW Gov) (457.2) (445.3) Admin
Slide 9: Margins and Costs
FINANCIAL PERFORMANCE MARGINS AND COSTS HIGHER COAL PRICES DRIVING HIGHER MARGINS – Coal prices in Australian dollar terms (excluding FY2018 FY2017 royalties) increased 16% during the year Coal Sales (equity basis, excl. Mt 16.0 15.5 – Realised metallurgical coal price averaged purchased coal) US$11
Slide 10: Balance Sheet
FINANCIAL PERFORMANCE BALANCE SHEET BALANCE SHEET IN EXCELLENT SHAPE – Strong balance sheet supports a sustainable capital allocation framework 30 June 2018 30 June 2017 $’m $’m – The Board has declared an unfranked dividend of $0.27 per share payable September 2018 – shareholder returns Cash on han
Slide 11: Capital Allocation – FY2018
FINANCIAL PERFORMANCE CAPITAL ALLOCATION – FY2018 REDUCING DEBT, RETURNING CASH TO SHAREHOLDERS AND FUNDING GROWTH 854 (23) 415 (499) (44) (34) (9) (298) (327) (11) 112 87 30-Jun-17 Cashflow Net Interest Sustaining Growth Exploration & M&A Proceeds Repayment Distributions Purchase of 30-Jun-18 cash
Slide 12: Capex
FINANCIAL PERFORMANCE CAPEX SUSTAINING AND GROWTH CAPEX MODEST OVER THE NEXT TWO YEARS – Sustaining capex likely to be about $40 million per year – Open cut sustaining capex will be about $1.50/t ROM coal production – Narrabri sustaining capex has increased to about $3.50/t following the incorporati
Slide 13: Operations
OPERATIONS
Slide 14: Coal Sales
OPERATIONS COAL SALES SALES INCREASING IN LINE WITH PRODUCTION Equity Basis – 000t FY2018 FY2017 Change Maules Creek 7,231 6,659 9% Narrabri 4,032 4,776 (16%) Gunnedah Open Cuts 4,846 3,963 22% Coal Trading 1,256 328 283% Whitehaven Total 17,365 15,815 10% Whitehaven Managed Coal Sales (Mt) 25 20 15
Slide 15: Sales to Premium Markets
OPERATIONS SALES TO PREMIUM MARKETS WHITEHAVEN CONTINUES TO INCREASE SALES INTO A GROWING SE ASIA MARKET Thermal Coal Sales FY2018 – Managed coal sales of 22.1Mt including purchased 4% 3% 3% coal for the year Japan 4% Taiwan – Increasing sales of higher quality coal has seen 11% Korea Indonesia Taiw
Slide 16: Sales Mix
OPERATIONS SALES MIX MET COAL SALES TO GRADUALLY INCREASE AS A PROPORTION OF TOTAL Managed Coal Sales by Type – At a managed level the sales mix for FY2018 was 100% 69% NewC thermal, 17% metallurgical coal and 14% other thermal 80% – An increase in metallurgical coal sales to 21% of 60% the total is
Slide 17: ROM Coal Production
OPERATIONS ROM COAL PRODUCTION STABLE PRODUCTION FOR THE YEAR Equity Basis – 000t FY2018 FY2017 Change Maules Creek 8,215 7,297 13% Narrabri 4,402 5,087 (13%) Gunnedah Open Cuts 5,110 5,334 (4%) Whitehaven Total 17,727 17,718 0% Whitehaven Managed ROM Coal Production (Mt) 25 20 15 10 5 - FY2013 FY20
Slide 18: Maules Creek Mine
OPERATIONS MAULES CREEK MINE MAULES CREEK PRODUCTION CONTINUES RAMPING TO ITS APPROVED LEVEL – Maules Creek ROM coal production Maules Creek Saleable Coal Production (Mt) 10.0 achieved an annualised rate of 11.7Mt in the second half of the year 8.0 – The approved production level of 13Mt ROM coal is
Slide 19: Maules Product Profile
OPERATIONS MAULES PRODUCT PROFILE METALLURGICAL COAL SPLIT DRIVEN BY CURRENT PRICES AND DEMAND – Met coal production from the mine in FY2018 was Maules Creek Product Mix (Mt) 10.0 2.6Mt, 26% of total production 8.0 – The target split of 50:50 met/thermal coal remains but achieving the mix is market
Slide 20: Narrabri Mine
OPERATIONS NARRABRI MINE ONE OF THE MOST PRODUCTIVE UNDERGROUND MINES IN AUSTRALIA Narrabri ROM Coal Production (000's t) – ROM coal production of 6.3Mt for the year 8,000 was impacted by mechanical problems – now resolved and increased depth of cover 7,000 – Work on the new secondary roof support 6
Slide 21: Narrabri Mine Plan
OPERATIONS NARRABRI MINE PLAN PRODUCTION OVER THE NEXT TWO YEARS IMPACTED BY THREE LONGWALL MOVES – Two longwall changeouts occur in FY2020 – the step around of the volcanic intrusion 110 and a normal changeout from LW108 to LW109 FY2021 FY2020 109 – ROM coal production guidance for FY2020 is in the
Slide 22: Gunnedah Open Cuts
OPERATIONS GUNNEDAH OPEN CUTS A STABLE PRODUCTION PLATFORM OVER A NUMBER OF YEARS Gunnedah Open Cuts Saleable Coal – ROM coal production from the three open Production (Mt) cuts – Tarrawonga, Rocglen and Werris 6.00 Creek has been consistent for a number of years 5.00 – Rocglen is due to close at th
Slide 23: Vickery Extension Project
OPERATIONS VICKERY EXTENSION PROJECT EIS LODGED WITH NSW GOVERNMENT AUTHORITIES Project is fully approved as a 4.5Mtpa open cut. Whitehaven is seeking approval to increase production to 10Mtpa ROM coal and to be a processing hub for the Vickery precinct mines Location About 25kms north of Gunnedah R
Slide 24: Winchester South Project
OPERATIONS WINCHESTER SOUTH PROJECT ACQUISITION OF HIGH QUALITY METALLURGICAL COAL PROJECT COMPLETED – Located in Queensland’s Bowen Basin, the source of over half the world’s high quality metallurgical coals – The project is well placed in relation to key infrastructure with rail running over the t
Slide 25: Community
COMMUNITY
Slide 26: Working with the Community
COMMUNITY WORKING WITH THE COMMUNITY WHITEHAVEN HAS STRONG POSITIVE REPUTATION IN THE REGION Note: Financial numbers include Whitehaven and its Joint Venture Partners 26 //FULL YEAR RESULTS FY2018
Slide 27: Outlook for Coal Use
OUTLOOK FOR COAL USE
Slide 28: Commitment to Coal Use
OUTLOOK FOR COAL USE COMMITMENT TO COAL USE A TOTAL OF 24 COUNTRIES HAVE INCLUDED COAL USE IN THEIR NATIONALLY DETERMINED CONTRIBUTIONS – Three of the largest coal users – China, India and Japan will continue to use coal for decades to come as they install new HELE technology – Many other countries
Slide 29: IEA Forecasts Demand Growth
OUTLOOK FOR COAL USE IEA FORECASTS DEMAND GROWTH ASIA - THE LARGEST GROWTH AREA FOR COAL OVER THE NEXT 25 YEARS Asian Coal Demand Growth (Mtce) 5000 – IEA forecasts indicate that in the broad Asian region coal demand continues to grow in the 4500 forecast period adding 480Mtce (560Mt, 4000 6,00kcal
Slide 30: Asia the Growth Engine
OUTLOOK FOR COAL USE ASIA THE GROWTH ENGINE DEMAND GROWTH IS DRIVEN BY THE DEPLOYMENT OF NEW COAL FIRED GENERATORS Annual New Coal Fired Capacity (GW) – Deployment of new coal fired generating 80.0 capacity continues throughout Asia 70.0 – The additional capacity excluding China 60.0 (supplied by do
Slide 31: Electricity Growth in Asia
OUTLOOK FOR COAL USE ELECTRICITY GROWTH IN ASIA COAL’S SHARE OF GENERATION INCREASES FROM 35% TO 40% BY 2030 Forecast Electricity Demand (TWh) – Electricity demand is Asia is forecast to 18000 grow from 9,874TWh in 2016 to 16000 16,032TWh in 2030, the equivalent of 14000 adding 6 more Japans’ to the
Slide 32: New Markets for Coal
OUTLOOK FOR COAL USE NEW MARKETS FOR COAL GROWTH IN SE AND SOUTH ASIA WILL PROVIDE MANY MARKET OPPORTUNITIES FOR COAL EXPORTERS SE and South Asian Electricity Demand (TWh) 3000 – Electricity demand in SE and South Asia is 2500 forecast to grow from 1,029TWh in 2016 (equivalent to Japan) to 2,730TWh
Slide 33: Outlook for Whitehaven
OUTLOOK FOR WHITEHAVEN
Slide 34: Whitehaven's Production Profile
OUTLOOK FOR WHITEHAVEN WHITEHAVEN’S PRODUCTION PROFILE PRODUCTION TO GROW WITH VICKERY AND WINCHESTER SOUTH DEVELOPMENT Whitehaven Saleable Coal Production Profile (100%, Mt) – Managed saleable coal 40 production is forecast to grow 35 strongly from the startup of the 30 25 Vickery project 20 – The
Slide 35: Targets for FY2019
OUTLOOK FOR WHITEHAVEN TARGETS FOR FY2019 CONTINUING TO DELIVER Operations − Continue improving safety performance − Deliver saleable coal production guidance in the range of 22.0Mt to 23.0Mt (100% basis) − Deliver FY2019 cost guidance of A$64/t − Continue ramping up production coal from Maules Cree
Slide 36: Thank You
THANK YOU www.whitehavencoal.com.au
Slide 37: Appendices
APPENDICES
Slide 38: Location
APPENDICES LOCATION 38 //FULL YEAR RESULTS FY2018
Slide 39: Resources
APPENDICES Whitehaven Coal Limited – Coal Resources – August 2018 Measured Indicated Measured + Inferred Competent Report Tenement Resource Resource Indicated Resource RESOURCES CL375 AUTH346 (A) Mt (B) Mt (A + B) Mt (C) Mt Person Date Maules Creek Opencut* 410 200 610 10 1 Mar-18 ML1701 ML1719 Narr
Slide 40: Reserves
APPENDICES RESERVES Whitehaven Coal Limited – Coal Reserves – August 2018 Recoverable Reserves Marketable Reserves Competent Report Tenement Proved Probable Total Proved Probable Total Person Date Mt Mt Mt Mt Mt Mt Maules Creek Opencut* CL375 AUTH346 360 140 500 320 120 440 1 Mar-18 Narrabri North U