Whitehaven Coal Limited · ASX:WHC
Whitehaven Coal — FY21 Earnings Presentation
40 slides from Whitehaven Coal's earnings presentation, Aug 26, 2021
Slide 1: Full Year Results FY21
Full Year Results FY21 26 August 2021 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 Whiteha
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 is in Asia
Whitehaven’s customer base is in Asia Whitehaven’s coal products are 2 14 Japan exported to Asia 1 6 Korea Our coal products are used: - 2 Taiwan 1. In high efficiency, India 2 - 1 - Vietnam low emission (HELE) electricity generation - 1 Philippines Malaysia - 1 2. to make steel; and Indonesia - 1 3
Slide 5: Premium products are sold into premium markets
Premium products are sold into premium markets End users increasingly prefer high quality, high-CV thermal coal Thermal coal sales FY21 Metallurgical coal sales FY21 2% 2% • We produce and sell high 6% 7% quality coal products into 6% 8% premium Asian markets 8% • Managed coal sales, including 46% 1
Slide 6: Thermal coal price trend
Thermal coal price trend Both 6000CV and 5500CV coal prices have reached historical highs AUD/t 250 AUD/metric tonne FOB Australia 200 150 100 50 0 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 API5 gC NEWC 6
Slide 7: Global industrial activity
Global industrial activity Industrial production growth and contribution by region 8.0% 6.1% Industrial production year-on-year change (%) 6.0% 4.0% 4.0% 3.0% 2.6% 2.4% 2.0% 0.0% -2.0% -4.0% -6.0% 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Wood Mackenzie macroeconomic outlook Q2
Slide 8: Coal-fired power generation outlook for key markets
Coal-fired power generation outlook for key markets Countries in Asia have the youngest coal-fired fleet globally ‘Locking-in’ long term coal-fired generation (absent policy changes) 1200 800 700 1000 600 Generation (TWh) 800 Generation (Gw) 500 600 400 300 400 200 200 100 0 0 2015 2020 2025 2030 20
Slide 9: Emerging supply gap in thermal seaborne coal
Emerging supply gap in thermal seaborne coal Global seaborne supply meets demand only once “Highly Probable and Probable” new mines have been built and “Possible new mines” are brought online Mt Source: Wood Mackenzie July 2021 Note forecasted supply excludes suspended capacity * Probable under supp
Slide 10: Seaborne demand for high-CV thermal coal
Seaborne demand for high-CV thermal coal Trend towards high-CV thermal coal due to increased environmental regulation 100% 75% of all demand will be for high-CV thermal coal Total forecast seaborne thermal coal demand 90% 80% 70% • Increased environment management regulation 60% • In the near term,
Slide 11: Whitehaven helps customer countries meet their 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 12: High-quality thermal coal supports emissions reduction
High-quality thermal coal supports emissions reduction 1.6 70% 1.4 60% 1.2 50% In a world where carbon 1.0 emissions reduction efforts Emissions reduction 40% (tCO2/MWh) are a focus for policymakers 0.8 as well as major energy 30% 0.6 generators and consumers, 20% high-quality coal, particularly 0.4
Slide 13: Asian demand for metallurgical coal imports
Asian demand for metallurgical coal imports Total Asia seaborne demand by country Asia seaborne demand by metallurgical coal type Mt Mt 400 300 Japan 350 Other Asia 243.1 Malaysia 250 Taiwan 300 Indonesia Vietnam 200 South Korea 250 146.3 China 200 150 150 100 66.2 100 India 42.5 50 50 60.5 39.6 0 0
Slide 14: FY21 Results
FY21 Results
Slide 15: Safety performance
Safety performance Safety is always a key focus for Whitehaven 25 20 20.6 ROM coal production (Mt) 15 and TRIFR Whitehaven recorded 10 a TRIFR of 5.86 5.86 5 as at 30 June 2021 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 ROM coal production (Mt) Total Recordable Injury Frequen
Slide 16: Sustainability highlights FY21
Sustainability highlights FY21 Approx. 75% 9% $344.7 267ha of 2,500-strong of workforce million of land workforce based in identifies as rehabilitated spent with regional areas Aboriginal and/or local suppliers Torres Strait Islander $392,300 $5.15 million Business resilience 12.4% in community spen
Slide 17: ROM coal production profile FY15 – FY21
ROM coal production profile FY15 – FY21 25.0 23.1 23.0 23.2 20.5 20.7 20.6 20.0 Managed ROM coal production (Mt) 9.7 11.0 11.7 15.8 7.8 15.0 10.7 2.6 12.7 10.0 7.3 7.7 6.9 6.3 6.4 6.1 4.1 5.0 5.5 5.8 6.1 5.7 5.1 3.9 3.8 - FY15 FY16 FY17 FY18 FY19 FY20 FY21 Open Cuts Narrabri Maules Creek Total Note:
Slide 18: Sales volumes profile FY15 – FY21
Sales volumes profile FY15 – FY21 25.0 22.1 21.6 20.7 1.3 20.1 1.6 20.2 20.0 0.1 0.4 19.8 2.4 2.0 7.4 8.9 9.6 9.3 Coal sales (Mt) 15.0 14.0 7.9 1.8 9.6 10.0 7.1 7.5 6.8 5.8 5.7 6.2 4.5 5.0 5.1 5.1 4.6 5.3 5.0 3.7 3.6 - FY15 FY16 FY17 FY18 FY19 FY20 FY21 Open Cuts Narrabri Maules Creek Sales of Purch
Slide 19: Maules Creek
Maules Creek Record annual production Managed ROM coal production (Mt) • FY21 managed ROM production of 12.7 12.7Mt achieved, an 18% increase in Guidance range production vs pcp 12.1-12.5Mt • During the year mining reached pit 7.4 H2 bottom, allowing for increased in-pit overburden dumping 11.0 11.7
Slide 20: Narrabri
Narrabri Operationally a challenging year Managed ROM coal production (Mt) • FY21 managed ROM production of 4.1Mt, a 34% decrease in production vs pcp. This result reflected the impact of geological challenges in panel 109, first encountered in the December quarter • Mining through fault affected gr
Slide 21: Gunnedah open cuts
Gunnedah open cuts Smoothing annual production Managed ROM coal production (Mt) • FY21 managed ROM production of 3.8Mt, inline with pcp • Both Tarrawonga and Werris Creek Guidance producing at consistent levels for 3.8 range continuing operations 3.6-4.0Mt 2.1 H2 4.4 4.5 4.5 4.3 3.9 3.8 1.8 H1 FY201
Slide 22: Financial headlines
Financial headlines Profit and Loss ($m) FY21 FY20 Comment EBITDA 204.5 306.0 Refer to slide 25 Net (loss)/profit after tax before significant items (87.3) 30.0 Net (loss)/profit after tax (543.9) 30.0 Reflects impairment of assets – refer to slide 24 Cash generated from operations 169.5 189.9 Divid
Slide 23: Profit and Loss
Profit and Loss Financial performance – A$ millions FY21 FY20 Revenue 1,557.0 1,721.6 Other income 6.8 3.5 Operating expenses (700.4) (695.6) Coal purchases (173.7) (220.7) Rail, Port, Marketing and Royalties (439.7) (463.3) Admin and other expenses (including net FX gain/loss) (45.5) (39.5) EBITDA
Slide 24: Significant items
Significant items Asset impairments at Narrabri and Werris Creek • The FY21 result was impacted by the recognition of a pre-tax significant non-cash $650 million (FY20: nil) impairment charge allocated to: • Narrabri ($548.7 million) - reduction in the JORC coal reserves for the current Narrabri min
Slide 25: EBITDA FY21 v FY20
EBITDA FY21 v FY20 Realised Prices FY21 FY20 Thermal (USD/t) 68 66 Metallurgical (USD/t) 85 89 $m 350 30 300 (149) 250 152 200 3 150 306 FX FY21 FY20 100 AUD:USD 0.75 0.67 205 50 - FY20 Price (net of royalty) FX Sales Volume Costs FY21 25
Slide 26: Unit costs FY21 v FY20 (A$/t)
Unit costs FY21 v FY20 (A$/t) A$/t 26
Slide 27: STRIVE
STRIVE Embedding a culture of continuous improvement to deliver reliable, executable and repeatable productivity gains STRIVE Continuous Increased Profit maximization programme improvement productivity & costs savings Project to date 31/12/20 Project to date 30/6/21 Initiatives identified, yet to be
Slide 28: D&A and net finance expense
D&A and net finance expense FY21 FY20 Drivers Depreciation & amortisation $260.7m $224.6m • Increased production from Maules Creek and major rebuilds of the Excavator and Haul truck fleets D&A per tonne (sales of own coal) $18/t $16/t Net finance expense $62.0m $39.1m • Reflects increased drawn bala
Slide 29: Investing - capital expenditure
Investing - capital expenditure Sustaining PP&E Growth projects FY21 $63m FY21 $24m Operating mine projects • Fleet Major Overhauls • Maules Creek AHS • Sustaining capex • Vickery extension Growth projects • Northern mains development • Winchester South • Water security, environmental • Narrabri Sta
Slide 30: Net debt and liquidity
Net debt and liquidity 30 Jun 2021 30 Jun 2020 • Available liquidity of $407m at 30 Jun 2021 $m $m • Undrawn senior debt facility of $312m Senior secured bank facility (drawn) 688.0 638.0 • Cash of $95m ECA1 58.0 68.1 • Increase of $50m in senior drawn debt driven by Finance leases 173.9 216.3 • FY2
Slide 31: Financing
Financing Diversified sources of capital Senior debt facility Export Credit 2 Leased equipment Bank guarantees3 as at 30 June 2021 as at 30 June 2021 as at 30 June 2021 as at 30 June 2021 $688m drawn $58m $263m $469m drawn • $1bn syndicated facility • Average tenor of seven • Tenor of four or five y
Slide 32: Debt metrics
Debt metrics Uncertainty calls for a more conservative leverage stance Key Ratios • Leverage Through the cycle position to be • Average Tenor of debt to be managed such maintained between Net Cash in the top half that no material refinance due within 12 of the cycle and 0.5 x EBITDA (½ * turn of mon
Slide 33: Guidance for FY22
Guidance for FY22
Slide 34: FY22 production, sales & cost guidance
FY22 production, sales & cost guidance FY21 FY22 Key elements Comments actual guidance Managed ROM Coal Production Mt 20.6 20.0 – 21.5 Maules Creek Mt 12.7 12.1 - 12.5 Weighted to the second half (H2 55%) Longwall change-out Q2 FY22 and mid-panel step- Narrabri Mt 4.1 4.3 – 5.0 around of fault affec
Slide 35: FY22 capital expenditure guidance
FY22 capital expenditure guidance Key elements FY21 actual FY22 guidance Comments Sustaining Capital $m 61 95 - 115 $30m - $35m Fleet overhauls $35m - $40m sustaining /productivity $10m - $15m Water, environmental & biodiversity $20m - $25m Establishing mining precinct in Narrabri southern area Narr
Slide 36: FY22 focus
FY22 focus • Debt reduction and capital management/shareholder returns • Build upon early STRIVE wins • Optimise Maules Creek fleet productivity • Optimise Narrabri’s transition to shallower ground in FY23 and Stage 3 extension approvals • Dynamic blending of coal portfolio to optimise margin 36
Slide 37: Appendices
Appendices
Slide 38: 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 Winchester South will increase Whitehaven’s metallurgical coal production
Slide 39: 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 40: 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