This article first appeared on GuruFocus .
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Revenue:$5.4 billion, split 57% metallurgical coal and 43% thermal coal.
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Realized Price:AUD202 per tonne, down 6% year-over-year in Australian dollar terms.
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Unit Cost:$132 per tonne, down from $139 in FY25.
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Underlying EBITDA:$1.25 billion, with $677 million from Queensland and $596 million from New South Wales.
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Underlying NPAT:$227 million.
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Statutory NPAT:$385 million, reflecting post-tax non-recurring gains of $158 million.
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EBITDA Margin:$48 per tonne, or 27%.
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Production:40.3 million tonnes, at the top of guidance, with Queensland at 20.1 million tonnes and New South Wales at 20.2 million tonnes.
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Equity Sales:26 million tonnes.
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Managed Sales:32.7 million tonnes, up from 30.2 million tonnes in FY25.
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Net Debt:$1.3 billion, approximately one turn of leverage.
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Net Cash Inflow from Operating Activities:$857 million.
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Capital Expenditure:$349 million, about half the depreciation and amortization charge.
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Depreciation:$534 million; Amortization:$148 million.
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Net Finance Expense:$254 million, expected to decrease to around $215 million in FY27.
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Dividend:Fully franked $0.06 per share, payable September 15.
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Shareholder Returns:$159 million returned in FY26, with a payout ratio of 70%.
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Total Shareholder Return:41% for the year to June 30, 2026.
Release Date: August 19, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Record safety performance with TRIFR at 3.3 for the expanded business.
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Production exceeded 40 million tonnes, at the top end of guidance, with strong performance from Daunia and Maules Creek.
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Unit costs reduced to AUD132 per tonne, down from AUD139, driven by over 100 cost-saving initiatives.
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Successful refinancing lowered debt costs, saving $50-55 million annually, and achieved investment-grade rating.
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Strong balance sheet with net debt at ~1x EBITDA and $778 million cash, positioning well through the cycle.
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Positive long-term demand outlook with projected supply shortfalls in both met and thermal coal.
Negative Points
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Softer coal prices and adverse FX reduced revenue by nearly $300 million year-on-year.
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Underlying NPAT fell to $227 million, impacted by lower prices and higher finance costs.
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FY27 cost guidance has a wide range ($132-$147/t) due to diesel price uncertainty from Middle East conflict.
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Narrabri underperformed due to geotechnical issues, with capital expenditure increasing for longwall refurbishment.
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Daunia production expected to moderate in FY27 as it transitions to southern pits with longer hauls.
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Payout ratio exceeded policy at 70%, driven by a small interim dividend, which may not be sustainable.
Q & A Highlights
Q: What is the outlook for Narrabri's production, and can it return to a higher run rate after the capital program for the longwall refurbishment? A: Paul Flynn (CEO) confirmed that the company remains confident Narrabri can return to a 6-7 million tonne per annum range. The capital program involves a two-stage longwall refurbishment, with the next change-out completing the work. As the operation moves into Panel 205, where geotechnical concerns diminish, the company expects improved productivity and production levels, though it acknowledges the underperformance of the past few years.
Q: How should we think about the FY27 cost guidance, and what are the key assumptions driving the wide $15 per tonne range? A: Paul Flynn (CEO) explained that the guidance range reflects significant uncertainty, primarily around diesel prices due to the ongoing Middle East conflict. The midpoint assumes a net diesel price of $1.16 per litre, down from current levels of $1.45-$1.50, implying a return to pre-conflict pricing by year-end. Additionally, the company must counter 3-4% industry inflation, which the cost-out initiatives are designed to offset. The top end of production guidance aligns with the bottom end of the cost range.
Q: Can you provide more detail on the cost-out initiatives and structural savings available over the next 1-2 years, excluding diesel? A: Paul Flynn (CEO) highlighted that the company has over 100 initiatives across the business, ranging from right-sizing contracts for services (e.g., buses, camp accommodation) to productivity improvements. A key structural saving is the renegotiation of rail contracts in both New South Wales and Queensland, which eliminates surplus take-or-pay exposure and achieves per-tonne cost reductions. Kevin Ball (CFO) added that the FY25 and FY26 programs have built a culture of cost scrutiny that will deliver benefits in future years.
Q: What is the company's strategy regarding rare earths investments, and does it see itself becoming a producer? A: Paul Flynn (CEO) clarified that the name change to "Whitehaven" is purely a branding contemporization, not a signal of diversification away from coal. The rare earths investments are small and part of a longer-term strategy to explore opportunities aligned with energy transition trends. While not a passive investor, the company does not profess to be an expert in rare earth beneficiation. The investments are currently performing well, and Whitehaven could potentially assist smaller companies with capital and mining expertise in the future.
Q: Why is the FY27 production guidance for Queensland implying a slight decline at the midpoint, and is Daunia being permanently downgraded? A: Paul Flynn (CEO) explained that the guidance is conservatively positioned. Blackwater is expected to improve year-on-year after a weather-affected FY26, while Daunia will focus on opening up its southern domain, which requires more overburden movement in the short term. This changes the production mix, but it is not a permanent downgrade. The company expects to balance the total material movement between dirt and coal, with more output from Blackwater offsetting a temporary moderation at Daunia.
Q: What is the thinking behind the board paying a dividend above the 40-60% payout target, and why not distribute more fully franked dividends instead of buybacks? A: Kevin Ball (CFO) stated that the balance sheet is in excellent shape, and the $0.06 dividend reflects confidence in the business. Paul Flynn (CEO) added that the 70% payout is a function of paying an interim dividend when underlying NPAT was low, and the policy remains unchanged. Regarding franking credits, the company cannot access off-market buybacks due to legislative changes, and shareholder feedback is equally split between dividends and buybacks, so the balanced approach will continue.
Q: What is the current diesel price, and what sensitivity does the company have to it? A: Kevin Ball (CFO) noted that the current diesel price is around $1.30-$1.35 per litre, with crack spreads being a major driver. Paul Flynn (CEO) added that diesel consumption is roughly a litre per bank cubic meter (BCM) of material moved. The FY27 budget assumes a net price of $1.16 per litre at the midpoint, which requires a significant moderation from current levels. The company has no control over this input, making it the primary source of cost guidance uncertainty.
Q: Can you provide an update on the Vickery Extension project and the conditions required to proceed? A: Paul Flynn (CEO) stated that the view on Vickery remains unchangedit is a prospective opportunity, but timing and financial capacity are key. The company is using the next 12 months to examine funding options, including expressions of support from customers and suppliers. While a price above $130 would be welcome, it is not a prerequisite. The company is refreshing its cost assumptions for the project, given higher strip ratios and current inflationary pressures, to ensure the investment case remains robust.
Q: How should we interpret the FY27 managed coal sales guidance for New South Wales, which implies a decline despite flat production? A: Kevin Ball (CFO) explained that the sales guidance reflects factors such as yield from the Gunnedah open cuts and washing decisions, not a need to rebuild inventories. The company is carrying good stock levels into the year. Paul Flynn (CEO) added that the guidance range is designed to be conservative, with the company aiming for the top end of production and sales, which would align with the bottom end of the cost guidance.
Q: With the refinancing lowering interest costs by over $50 million annually, will these savings be returned to shareholders or used for growth? A: Paul Flynn (CEO) noted that lower interest expenses will flow through to higher NPAT, benefiting shareholders. He highlighted that FY27 is the final year of the deferred and contingent payment arrangements for Daunia and Blackwater, after which all cash flows from Queensland assets will accrue to Whitehaven. This will provide additional capital for shareholder returns or future growth opportunities, depending on the capital allocation framework.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
