Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY2018 Earnings Presentation
37 slides from Whitehaven Coal's earnings presentation, Feb 16, 2018
Slide 1: Whitehaven Coal Limited Half Year Results FY2018
WHITEHAVEN COAL LIMITED AUSTRALIA’S LEADING HIGH QUALITY COAL COMPANY HALF YEAR RESULTS FY2018 16 FEBRUARY 2018
Slide 2: Disclosure
H1 FY2018 RESULTS 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 PROJECTION
Slide 3: Agenda
H1 FY2018 RESULTS AGENDA – Highlights – Safety Performance – Financial Performance – Operations – Community – Outlook for Coal Use – Outlook for Whitehaven – Appendices 3 // HALF YEAR RESULTS FY2018
Slide 4: Highlights
H1 FY2018 RESULTS HIGHLIGHTS RECORD HALF YEAR PROFIT Safety improved with the Record half year net profit of TRIFR declining to 6.19 at 31 $257.2 million up 63% December Equity coal sales of 9.2Mt Record EBITDA of $460.6 including purchased coal million up 42% on pcp An interim dividend of Investmen
Slide 5: Safety Performance
H1 FY2018 RESULTS SAFETY PERFORMANCE IMPROVING SAFETY PERFORMANCE AND INCREASED PRODUCTION Whitehaven Group TRIFR and Saleable – Implementation of the “Safehaven Coal Production (Mt) Rules” programme has driven a step 25 change in safety performance across 20 the company over the last five years 15
Slide 6: Financial Performance
FINANCIAL PERFORMANCE
Slide 7: Financial Highlights
FINANCIAL PERFORMANCE FINANCIAL HIGHLIGHTS RECORD HALF YEAR PROFIT, CASH FLOW AND DIVIDEND H1 H1 Profit and loss Comment FY2018 FY2017 Net profit after tax ($’m) including significant items 257.2 157.5 – Up 63%, record half year result EBITDA before significant – Up 42% on pcp, higher 460.6 324.8 it
Slide 8: Record Half Year Profit
FINANCIAL PERFORMANCE RECORD HALF YEAR PROFIT HIGHER COAL PRICES AND SALES FLOWING DIRECTLY TO RESULTS Financial Performance - A$ millions H1 FY2018 H2 FY2017 H1 FY2017 Revenue 1,146.4 949.8 823.5 Other income 3.6 4.1 3.6 Operating expenses (421.4) (317.7) (271.5) Rail, Port, Marketing and Royalties
Slide 9: Margins and Costs
FINANCIAL PERFORMANCE MARGINS AND COSTS HIGHER PRICES DRIVING HIGHER MARGINS H1 H2 H1 – Increasing coal prices combined with FY2018 FY2017 FY2017 tightly controlled costs have generated Coal Sales (equity basis, excl. Mt 8.6 7.7 7.8 higher margins purchased coal) – Realised average thermal and Avera
Slide 10: Balance Sheet
FINANCIAL PERFORMANCE BALANCE SHEET BALANCE SHEET IN EXCELLENT SHAPE 31 Dec 2017 30 June 2017 – Net debt at 31 December 2017 of $146.9m $’m $’m after payment of capital return and Cash on hand 98.6 87.1 dividend Senior secured bank facility 190.0 325.0 – Net cash in mid November 2017 – Redrew debt f
Slide 11: Operations
OPERATIONS
Slide 12: Coal Sales
OPERATIONS COAL SALES RECORD HALF YEAR SALES Equity Basis – 000t H1 FY2018 H1 FY2017 Change Maules Creek 3,554 3,071 16% Narrabri 2,674 2,793 (4%) Gunnedah Open Cuts 2,349 1,894 24% Sales of Purchased Coal 655 38 - Whitehaven Total 9,232 7,796 18% Whitehaven Managed Coal Sales (000's t) 14,000 12,00
Slide 13: Sales to Premium Markets
OPERATIONS SALES TO PREMIUM MARKETS WHITEHAVEN CONTINUES TO GROW SALES INTO A GROWING SOUTH EAST ASIA MARKET H1 FY2018 Thermal Coal Sales 2% 6% Japan 3% 5% Taiwan – Managed coal sales of 11.9Mt for the half were 16% ahead Korea of sales in the pcp 12% Indonesia Malaysia – Increased sales of higher q
Slide 14: ROM Coal Production
OPERATIONS ROM COAL PRODUCTION STRONG PRODUCTION FROM MAULES CREEK Equity Basis – 000t H1 FY2018 H1 FY2017 Change Maules Creek 3,841 3,266 18% Narrabri 2,715 2,955 (8%) Gunnedah Open Cuts 1,838 1,971 (7%) Whitehaven Total 8,394 8,192 2% Whitehaven Managed ROM Coal Production (000's t) 14,000 12,000
Slide 15: Maules Creek Mine
OPERATIONS MAULES CREEK MINE MAULES CREEK PRODUCTION RAMPING ON SCHEDULE Maules Creek ROM Coal Production (000's t) – Maules Creek ROM coal production is 12,000 forecast to reach 11Mt in FY2018, up 13% on FY2017 as more mining fleet is added 10,000 to the mine 8,000 – The approved production level o
Slide 16: Narrabri Mine
OPERATIONS NARRABRI MINE A STRONG QUARTER BUT BELOW OUR EXPECTATIONS Narrabri Half Year ROM Coal Production (000's t) – ROM coal production was the 3rd best half 5,000 year of production over the last five years – Production labour was diverted towards the 4,000 installation of additional secondary
Slide 17: Narrabri Mine Plan
OPERATIONS NARRABRI MINE PLAN DECISION TAKEN TO MINE THROUGH FAULT IN LW108 AND LW109 FOLLOWING SUCCESSFUL MINING IN LW107 – The next longwall changeout from LW107 to LW108 is scheduled to commence in late April 2018 with longwall production forecast to commence from LW108 in June – The decision to
Slide 18: Gunnedah Open Cuts
OPERATIONS GUNNEDAH OPEN CUTS PRODUCTION RETURNED TO NORMAL AFTER THE STRONG H2 FY2017 Gunnedah Open Cut ROM Coal Production (000's t) – ROM coal production from the three open 4,000 cuts – Tarrawonga, Rocglen and Werris Creek – reflects the impact of a strong finish to the previous financial year 3
Slide 19: Vickery Project Update
OPERATIONS VICKERY PROJECT UPDATE EIS EXPECTED TO BE LODGED LATE IN THE MARCH QUARTER Project is approved as a 4.5Mtpa open cut by the NSW Government. Whitehaven is seeking approval to increase production to 10Mtpa ROM coal and to be a processing hub for the Vickery precinct mines Location About 25k
Slide 20: Community
COMMUNITY
Slide 21: Working with the Community
COMMUNITY WORKING WITH THE COMMUNITY WHITEHAVEN HAS STRONG POSITIVE REPUTATION IN THE REGION COMMUNITY COMMUNITY > $1 BILLION INVESTMENT IN OVER 40 ORGANISATIONS REGION SINCE 2012 SUPPORTED THIS HALF YEAR PEOPLE COMMUNITY OVER 1,400 VISITORS TO MINE 72% OF LOCAL PEOPLE POSITIVE OPEN DAYS AND TOURS O
Slide 22: Outlook for Coal Use
OUTLOOK FOR COAL USE
Slide 23: Commitment to Coal Use
OUTLOOK FOR COAL USE COMMITMENT TO COAL USE A TOTAL OF 24 COUNTRIES RESPONSIBLE FOR OVER 50% OF CARBON EMISSIONS INCLUDED COAL USE IN THEIR NATIONALLY DETERMINED CONTRIBUTIONS Three of the world’s largest coal users – China, India and Japan - will continue to use coal for decades to come. Other coun
Slide 24: Asia the Growth Engine
OUTLOOK FOR COAL USE ASIA THE GROWTH ENGINE CONTINUED STRONG GROWTH ASIAN COAL DEMAND Asian Region Coal Demand (Mtce) – Coal demand across the Asian region 5000 grows from 3.96Btce in 2016 to 4.44Btce 4500 2040, equivalent to an additional 4000 560Mtpa of 6000k/cal coal by 2040 3500 – Declining dema
Slide 25: Electricity Growth in SE Asia
OUTLOOK FOR COAL USE ELECTRICITY GROWTH IN SE ASIA COAL’S SHARE OF GENERATION INCREASES FROM 35% TO 40% BY 2040 Electricity Generation in SE Asia (TWh) – Sent out electricity from coal fired 2500 plants in SE Asia is forecast to grow by 578TWh from 321TWh in 2016 to 2000 898TWh in 2040, an increase
Slide 26: Why Is Coal So Widely Used Across Asia?
OUTLOOK FOR COAL USE WHY IS COAL SO WIDELY USED ACROSS ASIA? IN ASIA COAL UNDERPINS ECONOMIC GROWTH – LOW COST, RELIABLE AND SECURE Cost of Electricity Generation (US$/MWh) – The cost of coal fired electricity capacity 250 remains the lowest readily available and reliable energy source in the region
Slide 27: Improving Generation Technology
OUTLOOK FOR COAL USE IMPROVING GENERATION TECHNOLOGY HELE TECHNOLOGY IN SE ASIA INCREASES DEMAND FOR HIGH QUALITY COAL Installed Capacity by Technology (GW) – The deployment of HELE technology 180 increases in SE Asia - more 160 supercritical and ultra-supercritical 140 power stations are either bei
Slide 28: Outlook for Whitehaven
OUTLOOK FOR WHITEHAVEN
Slide 29: World Thermal Coal Demand
OUTLOOK FOR WHITEHAVEN WORLD THERMAL COAL DEMAND COAL DEMAND IS FORECAST TO CONTINUE GROWING OVER THE NEXT FIVE YEARS CRU Coal Demand Forecasts (Mt) – CRU, a respected industry consultant, 7,000 forecasts that world coal demand will grow by 400Mt over five years from an estimated 6.3Bt 6,500 in 2017
Slide 30: Asian Demand Growth
OUTLOOK FOR WHITEHAVEN ASIAN DEMAND GROWTH COAL DEMAND GROWS STRONGLY IN WHITEHAVEN’S KEY MARKETS Coal Demand Growth in Whitehaven's Key Markets (Mt) 700 600 500 400 300 200 100 - 2017 2018 2019 2020 2021 2022 South East Asia JKT – Coal demand in Whitehaven’s key markets is forecast to grow from 567
Slide 31: Whitehaven's Production Profile
OUTLOOK FOR WHITEHAVEN WHITEHAVEN’S PRODUCTION PROFILE MORE PRODUCTION GROWTH EXPECTED OVER THE NEXT FIVE YEARS Actual & Forecast Saleable Coal Production (100%, Mt) – Managed saleable coal production for 35 FY2018 is forecast to be in the range Actual Forecast 30 of 20.5Mt to 21.0Mt 25 – Production
Slide 32: Targets for FY2018
OUTLOOK FOR WHITEHAVEN TARGETS FOR FY2018 CONTINUING TO DELIVER Operations − Continue improving safety performance − Deliver saleable coal production guidance in the range of 20.5Mt to 21.0Mt (100% basis) − Deliver FY2018 cost guidance of A$60/t − Produce 11.0Mt ROM coal from Maules Creek for FY2018
Slide 33: Thank You
THANK YOU www.whitehavencoal.com.au
Slide 34: Appendices
APPENDICES
Slide 35: Location
APPENDICES LOCATION 35 //HALF YEAR RESULTS FY2018
Slide 36: Resources
APPENDICES Whitehaven Coal Limited – Coal Resources – August 2017 Measured Indicated Measured + Inferred Competent Report Tenement Resource Resource Indicated Resource Person Date RESOURCES Maules Creek Opencut* CL375 AUTH346 EL8072 (A) 220 (B) 400 (A + B) 620 (C) 30 1 Mar-17 Narrabri North Undergro
Slide 37: Reserves
APPENDICES RESERVES Whitehaven Coal Limited – Coal Reserves – August 2017 Recoverable Reserves Marketable Reserves Competent Report Tenement Proved Probable Total Proved Probable Total Person Date Maules Creek Opencut* CL375 AUTH346 190 310 500 175 265 440 1 Mar-17 Narrabri North Underground** ML160