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Whitehaven to boost debt reduction

 

Whitehaven Coal plans to use extra cashflow from the recent jump in coal prices to speed up its debt repayments, even as it holds off on shareholder payouts despite a surge in profitability.

The east coast miner's half-year net profit rose to $157.5 million from just $7.8 million a year ago, thanks to a sharp rebound in coal prices during the December quarter and increased production.

Revenue also jumped from the same time last year - up 43 per cent to $823.5 million.

"Whitehaven is capturing the benefit of the improved coal price environment, aided by a sustained focus on cost reduction," chief executive Paul Flynn said on Friday.

The increased cash flows and profit would be used to target the company's debt, he said.

"We would like to see debt lower in the next six months. We want to take another $200 million off, at least, which will bring us down to a more enduring level of debt," he said during an investor call on Friday.

The company reduced net debt by $231 million in the half year to $628 million.

Whitehaven, like other coal producers, has benefited from the dramatic jump in coal prices late last year, as anti-pollution measures in China cut supplies and boosted demand.

The company said it received an average price of $US92 a tonne for thermal coal and $US104 a tonne for metallurgical coal during the December quarter, when prices had peaked.

As a result, its average profit margin on coal sales jumped to 42 per cent during the six months to December, compared with 19 per cent a year earlier.

Coal sale volumes also rose by six per cent, to 7.8 million tonnes, helped by higher production at its two main mines - Narrabri and Maules Creek in NSW.

Despite prices having eased from their 2016 peaks, Whitehaven expects the strong run to continue for some time as Asian power producers target higher quality coal to produce more energy and reduce emissions.

The mining boss pointed to recent comments by Prime Minister Malcolm Turnbull about the critical role of cleaner coal in lowering emissions as support for its ongoing strategy of increasing exports of high quality coal to buyers in Asia.

"Prime Minister Turnbull's Asian counterparts not only share this perspective, they are leading the way through investment and energy policy settings that achieve meaningful carbon reductions, without compromising economic competitiveness or energy security," Mr Flynn said.

Whitehaven said production in the second half of FY2017 is likely to be higher than in the first half, and on Friday reaffirmed its guidance for full-year coal production to be between 21-22 million tonnes.

By 1543 AEDT, Whitehaven shares were down 2.7 per cent to $2.86, after having risen more than five-fold in value during the past 12 months.

WHITEHAVEN FIRST HALF PROFIT SURGES

* Net profit $157.5m vs $7.8m year ago

* Sales revenue up 43 pct to $823.5m.

* No dividend, unchanged.