Whitehaven Coal has swung back to profit and beaten its earnings guidance for the first half of the financial year despite falling coal prices.
The east coast miner made a net profit of $7.8 million in the six months to December 31, as shipment volumes jumped following the commissioning of the controversial Maules Creek mine in NSW.
Whitehaven made a loss of $77.9 million in the same period a year ago due to heavy writedowns.
Underlying earnings in the half year more than doubled to $106.4 million, slightly above its guidance of between $100 million and $105 million.
“We are operating in a cycle that is pretty challenging, but to turn in a profit at this time is a good sign for the future,” managing director Paul Flynn said.
Coal producers have been grappling with an extended slide in global prices, due to weakening demand in China and steady supply growth. Prices for both thermal and metallurgical coal fell in the half year, and Whitehaven said a recovery may only come by 2017.
“The strength of growth in Asian energy demand, combined with production cutbacks from key exporting countries, suggest that Asian coal markets will return to balance over 2016 and provide the basis for a price recovery commencing in 2017,” the company said.
It has tried to offset price falls by increasing exports to Japan, South Korea, Taiwan and India, where it receives a premium for its higher quality coal.
Mr Flynn said Whitehaven is on track to achieve its recently upgraded full year production forecast after a 63 per cent jump in half year output to 9.3 million tonnes.
That has come on the back of the Maules Creek mine, which was commissioned in July 2015. The new mine is now producing at an annual rate of 8.5 million tonnes.
Whitehaven also trimmed its average production cost by eight per cent from a year ago, to $58 a tonne.
The company will continue to drive down costs and expects to achieve another $1 to $2 per tonne reduction during the second half of the fiscal, Mr Flynn said.
Whitehaven shares, which had jumped more than 10 per cent this week ahead of the results, dropped 3.5 cents, or 7.9 per cent, to 41 cents.