Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — H1 FY2017 Earnings Presentation
43 slides from Whitehaven Coal's earnings presentation, Feb 17, 2017
Slide 1: Whitehaven Coal Limited Half Year Results FY2017
Whitehaven Coal Limited Australia’s Leading High Quality Coal Company HALF YEAR RESULTS FY2017 17 FEBRUARY 2017
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 – Financial Performance – Operations – Community – Outlook for Coal Use – Outlook for Whitehaven – Appendices – Additional Information 3 // HALF YEAR RESULTS PRESENTATION FY2017
Slide 4: Highlights
Highlights STRONG PROFIT AND CASH FLOW FOR THE FIRST HALF Safety (TRIFR 7.2) produce Equity coal sales of 7.8Mt up Profitable 7.7Mt of saleable half year at cycle coal lowsup 9% by 6% on pcp Half year net profit of $157.5 EBITDA of $324.8 million up million 205% on pcp Profitable half year at cycle
Slide 5: Safety
Safety
Slide 6: Safety Performance
Safety Performance SAFETY PROGRAMMES ARE DELIVERING IMPROVED OUTCOMES – Whitehaven recorded its lowest TRIFR Whitehaven Coal Group - TRIFR (12 Month Rolling Average Recordable Injuries per million hours worked) of 7.2 at the end of December 30 – The ongoing focus on Whitehaven’s 25 “Safehaven Rules”
Slide 7: Financial Performance
Financial Performance
Slide 8: Financial Highlights
Financial Highlights CAPTURING THE BENEFITS OF HIGHER COAL PRICES H1 H1 Profit and loss Comment FY2017 FY2016 Net profit after tax ($’m) 157.5 7.8 – 19% NPAT margin EBITDA ($’m) 324.8 106.4 – Up 205% on pcp Cash generated from operations ($’m) 263.6 118.3 – Up 123% on pcp Unit cost per tonne 56 58 –
Slide 9: Strong Profit Growth
Strong Profit Growth HIGHER COAL PRICES FLOWING DIRECTLY TO PROFITS Financial Performance - A$ millions H1 FY2017 H2 FY2016 H1 FY2016 Revenue 823.5 590.1 574.3 Other income 5.8 4.4 4.0 Operating expenses (271.4) (250.7) (264.7) Rail, Port, Marketing and Royalties (NSW Gov) (219.9) (212.4) (190.1) Ad
Slide 10: Revenue and Margin Increasing
Revenue and Margin Increasing – The strong increase in revenue is H1 H2 H1 FY2017 FY2016 FY2016 reflected in the improved margin Coal Sales (equity basis, excl. Mt 7.8 8.1 7.3 – Costs for the half year were in line with purchased coal) guidance provided earlier in the year Average revenue (excl. pur
Slide 11: Balance Sheet
Balance Sheet STRENGTHENING QUICKLY 31 Dec 2016 30 June 2016 – Net debt reduced by $231.1m $’m $’m – Further debt reduction remains a priority for the Cash on hand 106.8 101.5 second half Senior secured bank facility 655.0 835.0 – Subsequent to the end of the financial period (31 December), a furthe
Slide 12: Capital Allocation
Capital Allocation SUSTAINING CAPEX BEING MAINTAINED AND GROWTH CAPEX DECLINING H1 H2 H1 – Whitehaven continues to spend capital Capital Investment - $ Million FY2017 FY2016 FY2016 on sustaining the business for the longer Mine Sustaining Capital term Gunnedah Open Cuts sustaining 1.0 3.4 0.5 – Maul
Slide 13: Operations
Operations
Slide 14: Coal Sales
Coal Sales STRONG INCREASE IN SALES FROM MAULES CREEK Equity Basis – 000t H1 FY2017 H1 FY2016 Change Maules Creek 3,071 2,413 27% Narrabri 2,793 2,613 7% Gunnedah Open Cuts 1,845 2,133 (14%) Whitehaven Total 7,796 7,316 7% Whitehaven Managed Coal Sales (000's t) 12,000 10,000 8,000 6,000 4,000 2,000
Slide 15: Selling to High Value Markets
Selling to High Value Markets OVER 90% OF SALES INTO GROWING ASIAN MARKET Thermal Coal Sales H1 FY2017 Managed Coal Sales by Type 100% 5% 2% 4% Japan 80% Taiwan 9% Korea 60% Other Asia 20% 16% 16% 7% Malaysia 40% 10% Americas 53% 61% 68% 20% 63% Other 27% 22% 16% 0% FY2015 FY2016 H1 FY2017 Metallurg
Slide 16: ROM Coal Production
ROM Coal Production GROWING ROM COAL PRODUCTION Equity Basis – 000t H1 FY2017 H1 FY2016 Change Maules Creek 3,266 2,473 32% Narrabri 2,955 2,423 22% Gunnedah Open Cuts 1,971 2,189 (10%) Whitehaven Total 8,192 7,085 16% Whitehaven Managed ROM Coal Production (000's t) 12,000 Longwall Moves 10,000 8,0
Slide 17: Maules Creek
Maules Creek PRODUCTION RAMPING ON SCHEDULE Maules Creek ROM Coal Production (000's t) – ROM coal production of 4.4Mt at Maules 5,000 Creek in the first half was impacted by heavy and persistent rainfall in the 4,000 September quarter – Production in the second half of FY2017 will 3,000 be higher as
Slide 18: Maules Creek Product Mix
Maules Creek Product Mix PRODUCTION OF HIGHER MARGIN METALLURGICAL COAL INCREASING Maules Creek Product Mix (000's t) – Production of metallurgical coal reached 1.2Mt in 6,000 the first half and is expected to grow to about 1.7Mt in the current half 5,000 – Customer demand for the metallurgical coal
Slide 19: Narrabri Performance
Narrabri Performance FACE WIDENING PROJECT ON SCHEDULE Narrabri ROM Coal Production (000's t) – Narrabri produced 4.2Mt ROM coal 6,000 and 4.1Mt saleable coal in the first half Longwall Moves – Full year production guidance has 5,000 been revised to the range of 7.5Mt to 7.8Mt ROM coal for FY2017 4,
Slide 20: Gunnedah Open Cuts
Gunnedah Open Cuts PRODUCTION TO BE HIGHER IN THE SECOND HALF Open Cuts ROM Coal Production (000's t) – ROM coal production of 2.3Mt and 4,000 saleable coal production of 2.1Mt were constrained by wet weather and trucking approval limits in the first half 3,000 – Production in the second half will b
Slide 21: Vickery Update
Vickery Update EIS TO BE LODGED IN THE CURRENT HALF Project is currently approved as a 4.5Mtpa open cut by the NSW Government. Whitehaven is seeking approval to increase production to 10Mtpa ROM coal Location About 25kms north of Gunnedah Resources and Reserves Resource of 505Mt, Underground Resourc
Slide 22: Indicative Timetable for Vickery
Indicative Timetable for Vickery INCREASES WHITEHAVEN’S MANAGED PRODUCTION TO OVER 30MTPA WHEN FULLY RAMPED June 2017 EIS lodged for the commencement of the approval process CY2018 Formation of JV H1 CY2019 Project approved by all the relevant Government authorities H1 CY2019 Board makes final inves
Slide 23: Community
Community
Slide 24: Working with the Community
Working with the Community ONGOING COMMITMENT TO THE NORTH WEST NSW REGION – Local spend of $108m with businesses and suppliers during the half year to 31 December 2016 – Community spend totals $850m over past 4.5 years – Supported more than 40 local community groups in half year including Narrabri
Slide 25: Maules Creek Open Days
Maules Creek Open Days MAULES CREEK HOSTED OVER 700 PEOPLE AT EMPLOYEE AND COMMUNITY DAYS 25 // HALF YEAR RESULTS PRESENTATION FY2017
Slide 26: Outlook for Coal Use
Outlook for Coal Use
Slide 27: IEA Medium Term Forecasts
IEA Medium Term Forecasts COAL DEMAND CONTINUES GROWING Global Thermal Coal Demand (Mtce) 5000 – Global coal demand through to 2021 is forecast 4800 to grow based on recent IEA forecasts 4600 – The IEA forecasts coal demand in Asian 4400 nations (excluding China) continues to be 4200 strong with an
Slide 28: Coal Fired Plant Efficiency Improving
Coal Fired Plant Efficiency Improving DEPLOYMENT OF HELE TECHNOLOGY IMPROVES EFFICIENCY OF THE FLEET Average Coal Fired Plant Efficiency (%) – Deployment of HELE plants in Japan and 42.0 Germany is reflected in the high average efficiency of the plants Japan 40.0 – Deployment of HELE plants in China
Slide 29: Coal - Pathway to Lower Carbon Emissions
Coal - Pathway to Lower Carbon Emissions UTILISING HIGH QUALITY COALS IN MORE EFFICIENT HELE POWER STATIONS LOWERS EMISSIONS Emissions by Technology (tCO2/MWh) – If the world (including Australia) 1.6 converted from lignite and black coal fired subcritical power stations to black 1.4 coal fired USC
Slide 30: Examples from Australia and China
Examples from Australia and China THE TALE OF TWO POWER STATIONS – Waigaoqiao No3 power station in China began operating in 2008 utilising USC boiler technology • Two 1000MW units producing 2000MW operating at 46.5% efficiency producing 1.5Mtpa CO2, employing 265 people – Yallourn power station in V
Slide 31: Outlook for Whitehaven
Outlook for Whitehaven
Slide 32: Thermal Coal Market
Thermal Coal Market SEABORNE MARKET REBALANCED IN 2016 AND CONTINUES TO GROW STRONGLY Thermal Coal Demand Growth in Whitehaven's – Global production cuts rebalanced the Key Markets (Mt) thermal coal market during 2016 600 – The combination of production cuts and 500 growing demand for higher quality
Slide 33: Whitehaven's Production Growth
Whitehaven’s Production Growth MAULES CREEK RAMP UP AND WIDER FACE AT NARRABRI CONTRIBUTING TO GROWTH – Ramping up of production from Maules Saleable Coal Production (100%, Mt) Creek continues and the wider face at 25.00 Narrabri contributes from H2 FY2017 20.00 – Increased production of higher qual
Slide 34: Embedded Growth Opportunities
Embedded Growth Opportunities WHITEHAVEN HAS MANY OPTIONS TO GROW SHAREHOLDER VALUE – Increase the approval limit at Maules Creek from 13Mtpa ROM to 15+Mtpa ROM – Extend the longwall panels into the south area at Narrabri, increasing LOM and annual production – Seek opportunities to increase the foo
Slide 35: Targets for CY2017
Targets for CY2017 FOCUSSED ON GROWING PRODUCTION SAFELY AND DEBT REDUCTION Operations − Continue improving safety performance − Deliver saleable coal production guidance in the range of 21Mt to 22Mt (100% basis) − Deliver the face widening project at Narrabri and commence mining in the initial 400m
Slide 36: Whitehaven Coal
www.whitehavencoal.com.au >» WHITEHAVEN COAL WHITEHAVEN
Slide 37: Appendices
Appendices
Slide 38: Location
Location 38 // HALF YEAR RESULTS PRESENTATION FY2017
Slide 39: Resources
Resources Note: See Competent Person Statement on Slide 2 39 // HALF YEAR RESULTS PRESENTATION FY2017
Slide 40: Reserves
Reserves Note: See Competent Person Statement on Slide 2 40 // HALF YEAR RESULTS PRESENTATION FY2017
Slide 41: Additional Information
Additional Information
Slide 42: Balance Sheet
Balance Sheet A$ millions 31 Dec 2016 30 Jun 2016 Cash 106.8 101.5 Current receivables 131.4 68.3 Other current assets 68.2 69.1 Current assets 306.4 238.9 Non-current receivables 21.9 29.0 Other non-current assets 3,696.3 3,827.6 Total assets 4,024.6 4,095.5 Current payables 140.6 135.9 Current int
Slide 43: Access to Infrastructure
Access to Infrastructure BALANCED TAKE OR PAY POSITION Whitehaven's Committed Port Capacity (Mtpa) – Whitehaven’s take or pay commitments 25 23 24 in line with production 21 20 – Port capacity is readily available at both 20 of the major facilities in Newcastle 15 23 22 21 21 10 5 0 FY16 FY17 FY18 F