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Whitehaven Coal share price tumbles despite record profit and special dividend

James Mickleboro

The Whitehaven Coal Ltd (ASX: WHC) share price was out of form again on Thursday.

The coal miner’s shares dropped to within one cent of their 52-week low following the release of its full year results, before ending the day 3% lower at $3.38.

How did Whitehaven Coal perform in FY 2019?

In FY 2019 Australia’s leading producer of premium thermal and metallurgical coal reported a 10% increase in sales revenue to $2,487.9 million, a 3% lift in underlying EBITDA to $1,041.7 million, and a record net profit after tax before significant items of $564.9 million.

This solid result was driven by record production of 23.2Mt of ROM coal during the 12 months on a managed basis.

Unit costs rose slightly year on year to $67 a tonne due to a combination of factors including higher fuel prices, the high quality product strategy, and the continued impact of short and medium term factors that have previously been announced.

This led to Whitehaven Coal generating cash from operations of $964.1 million, up 4% on FY 2018. Which allowed the board to declare a dividend of 30 cents per share to be comprised of an ordinary dividend of 13 cents per share, franked to 50%, and an unfranked special dividend of 17 cents per share.

Whitehaven Coal’s managing director and CEO, Paul Flynn, was pleased with the company’s performance in FY 2019.

He said: “It is great to have delivered another record year of profit and continue a pattern of strong and consistent financial returns.”

Adding: “This year’s record distribution and our full year payout ratio of 88% of NPAT before significant items honours our prior commitment to return surplus cash to shareholders. With significant positive cash flow generated across the portfolio and debt all but eliminated, we are putting our strong balance sheet to work, progressing our two key development projects and investing in technology and expansion initiatives at our existing operations.”

Mr Flynn spoke positively about the future and believes a key transformation point is coming.

He said: “We are fast approaching a key transformation point in the evolution of Whitehaven that will give rise to a larger, more efficient and better-integrated enterprise, well positioned to take advantage of the demand for high quality coal in the Asian region.”

Why did its shares sink lower?

Given its record production, profits, and dividends, I suspect Whitehaven’s shares would have pushed higher today had the market not had its mini meltdown.

It wasn’t just Whitehaven Coal tumbling lower. The market selloff also weighed on mining giants BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO). Both ended up 3% lower for the day as well.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019