Iron ore weakness to continue into 2025 and beyond, says Fitch Solutions’ BMI
Looking beyond 2024-2025, BMI analysts maintained their view that iron ore prices will likely follow a multi-year downtrend.
Whitehaven Coal on Thursday forecast weaker-than-expected annual managed coal output for fiscal 2024 and said it will suspend its buyback program as it may need to allocate money to growth projects, sending its shares down nearly 5%.
“Whitehaven has decided that the share buyback should be temporarily suspended while it considers application of Whitehaven’s capital allocation framework in light of growth opportunities,” Australia’s largest independent coal miner said.
Analysts at Barrenjoey said the coal miner’s final dividend of 42 Australian cents per share is where the “good news stops” for Whitehaven as its 2024 output outlook falls short of estimates.
Whitehaven expects to produce managed run-of-mine coal between 18.7 and 20.7 million metric tons for the year ending June 2024, higher than last year’s 18.2 million tons, but below a Visible Alpha estimate of 21.6 million tons, according to Barrenjoey.
“Guidance for FY24 shows modest production growth and moderating cost inflation,” analysts at Citi said.
Shares of the coal miner slipped 4.9% earlier, and were last trading 4.5% lower at A$6.96, the weakest level since August 9.
Whitehaven expects capital spending of between A$460 million and A$570 million in FY24, nearly double the A$241 million it spent a year ago.
Meanwhile, the coal miner posted a better-than-expected fiscal 2023 profit on the back of elevated average realized prices for its products, mainly in the first-half of the fiscal.
Prices for coal remained strong, boosted by sanctions on Russia that triggered a scramble for alternate supplies. Whitehaven forecast prices to be further supported by demand growth in Asia.
Whitehaven expects thermal coal prices to swing upwards as “restocking requirements increase in the months leading up to the Northern Hemisphere winter”.
The miner also forecast metallurgical coal pricing to be strong and driven by demand growth in India, emerging Asia, as well as China in the longer-term.
The miner reported a net profit after tax attributable of A$2.67 billion ($1.73 billion) for the year ended June 30, compared with a profit of A$1.95 billion a year earlier. That beat Refinitiv estimates of A$2.63 billion.
Whitehaven declared a final dividend of 42 Australian cents per share, compared with 40 Australian cents per share last year.
($1 = 1.5430 Australian dollars)
(By Sameer Manekar and Riya Sharma; Editing by Maju Samuel, Stephen Coates and Shri Navaratnam)
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