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Whitehaven shocks with new profit warning
Troubled Whitehaven Coal has cut its earnings forecasts again, indicating it may earn as little as $20 million in 2012-13 if weak market conditions persist - less than half previous estimates.
Late last year Whitehaven, whose largest shareholder is former billionaire Nathan Tinkler, said that while a wide range of earnings outcomes were possible, if current prices for semi-soft coking coal and thermal coal were assumed along with consensus analyst estimates of production, its full-year earnings before interest tax depreciation and amortisation could be just $50 million instead of the prevailing analyst consensus forecast of $185 million.
Releasing its December quarter production figures this morning, Whitehaven said its EBITDA for the first half would be as low as $10 million and if soft coal prices and the high dollar continued, the second half result would be similar.
Whitehaven shares plunged more than 6 per cent after the announcement, falling 21 cents to $3.26.
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‘‘We always knew if was going to be a tough result’’ said PhillipsCapital analyst Lawrence Grech, who added Whitehaven’s production of 2.4 million tonnes for the quarter was in line with expectations.
Whitehaven said the price of its metallurgical product, Newcastle semi-soft coking coal, had remained stable at around $US113.50 a tonne free on board (FOB) in the December quarter, and this was expected to continue in the March quarter, while the price of standard Newcastle thermal coal had risen from around $US89 per tonne in September to over $US93 a tonne in January.
Nevertheless, Whitehaven said that after allowing for NSW royalties of approximately 8 per cent and losses on the exchange rate - with the company effectively hedged at 97 cents - ‘‘the net revenue for spot thermal coal still remains at or below the FOB cash cost per tonne of many producers’’.
Whitehaven also said its bottom line result for the first half would be affected by an unspecified write-down of low-value coal inventory, asset adjustments associated with the Sunnyside Mine being placed on care and maintenance, and the derailment at Boggabri disrupting the Narrabri mine operations during December 2012.
Whitehaven is believed to be a potential takeover target and last month confirmed reports it had held talks with China’s Shenhua, which is developing the Watermark project in the Gunnedah Basin, although it said these did not result in an offer for the company.
There has also been speculation that Mr Tinkler, who owns 19.4 per cent of Whitehaven last year mounted an unsuccessful privatisation bid for the company, and then attempted to unsuccessfully to spill the board.
A six-month standstill agreement, which prevented Mr Tinkler from launching another takeover bid, expired this month.
Last year Mr Tinkler, who lives in Singapore, faced intense speculation about his financial position after wind-up actions were initiated against a number off his private companies by creditors including the tax office. Some of those proceedings have since been withdrawn after debts have been paid.
As BusinessDay reported on December 21, Mr Tinkler has debts to hedge fund Farallon Capital, including principal and interest, of as much as $700 million.
BusinessDay has previously reported that Mr Tinkler’s debts to Farallon, including principal and accumulated interest, amount to about $700 million and are secured against his stake in Whitehaven, worth $627 million at today’s prices.
Read more: http://www.smh.com.au/business/mini...fit-warning-20130131-2dmba.html#ixzz2JVsi6i7p
