New Hope Corporation notes 102.4% growth in NPAT; Shares up 8.571%

Key Takeaways:

• New Hope Corporation's net income has increased 102.4% to AU$668.6 million.
• Net cash from operating activities grew 117.3%.
• The Company declared an interim dividend of AU 30.0 cents per share.

Australian controlled diversified energy company New Hope Corporation Limited (ASX: NHC) was the top gainer on ASX 200 (at AEDT 12:12 PM) with 8.571% growth in the share price. At this time, the stock is trading at AU$5.32. NHC stock jumped following the release of its robust 1H FY2023 results.

1H FY2023 Highlights:

• Net profit after tax increased significantly by 102.4% to AU$668.6 million.
• Underlying EBITDA improved 87.3% to AU$1,038.5 million.
• Net cash from operating activities grew 117.3% to AU$983.5 million.
• The closing balance on 31 January 2023 stood at AU$971.2 million.
• The Company declared an interim dividend of AU$263.0 million. It represents 30.0 cents per share, and a Special Dividend of AU$87.7 million, representing AU10.0 cents per share, fully franked and payable on 3 May 2023.

An increase in the average drove the solid 1H FY2023 result realised prices by 142.9% to AU$467.4/t in 2023 from A$192.4/t in the previous corresponding period (pcp). Gross revenue from coal sales increased from AU$1,005.7 million at the end of 31 January 2022 to AU$1,541.9 million in 2023, representing a growth of 53.3%. The gross revenue was marginally offset by lower sales volumes due to adverse weather impacts on operations and the logistics corridor. The underlying Free On Board cost was AU$83.8/t. It represents a growth of 59%. Further, the unit costs are being impacted by inflationary pressures. Also, the labour costs have increased as Bengalla mine focuses on ramping up operations to produce 13.4 Mtpa ROM (Run of Mine). The increase is also attributable to the significant weather events impacting production.

Due to strong coal prices, cash generated from the operations improved 117.3% to AU$983.5 million on pcp. The Company's capital position remains strong with a closing balance of Cash and Cash Equivalents of AU$971.2 million and a term deposit of AU$100 million. The Company paid substantial income tax of AU$399.2 million in the period to 31 January 2023 concerning the FY2022.

Cash outflows from Investing Activities were AU$66.6 million, driven by investment in sustaining capital for Bengalla's Coal Handling Preparation Plan along with open pit operations. The Company also invested in supporting growth expenditure to increase operating fleet capacity to ramp up to 13.4Mt ROM.

Cash outflows from Financing Activities were AU$654.5 million. The surge was partly due to the successful conclusion of the reverse book-build of the NHC's AU$200.0 million 2.75% Senior Convertible Notes due in 2026 and on market buy-backs.

Developments during 1H FY2023:

The success of the Company's diversified ventures and the reputation for hard work and sensible management have driven the business so far. The strong result of the Company in the half year ended 31 January 2023 showcases the operating excellence during the period. The key developments across different projects are:

• Pastoral Operations: During the period, 200 head of cattle, including mostly steers, were sold at strong prices. In 2H FY2023, a further 900 head were earmarked for sale.
• At Acland Pastoral Company, winter grain crops of wheat and barley yielded 1,700 tonnes, with wet weather affecting quantity and quality. Presently ~650 ha has been planted to grain sorghum.
• Given the significant wet weather, there is ample feedstock at Bengalla Pastoral Company. NHC is capitalising on this by developing an independent breeding herd.
• NHC's 100% owned subsidiary Bridgeport Energy Limited continues to benefit from strong oil prices with an average realised price at 31 January 2023 of US$86.4/bbl, up 8.3% from US$79.8/bbl in 1H FY2022 ended 31 January 2022.
• Queensland Bulk Handling is Brisbane's leading bulk handling facility. It exported 1.0Mt of coal during the period ended 31 January 2023. It was 1.5Mt in the previous corresponding period. The reduction in the export volume was due to no production throughput from New Acland Coal Mine, as the site was on care and maintenance during 1H FY2023.

Outlook:

The Company's long-term strategy is to remain focused on coal via its existing portfolio as well as on new opportunities in either metallurgical or thermal coal production. NHC will continue investing in assets that suit its portfolio and deliver shareholders robust cash generation and steady returns. The fossil fuel industry in Australia is a big employer and an important contributor to Australia's economy, helping reinforce the living standard of Aussies.

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