Whitehaven Coal (WHC) has delivered an optimistic view of the rest of the year on the back of a narrowed interim loss, as the once struggling miner reaps the benefits of reductions in the cost of production and improved resilience to the volatility of the coal price.
Investors responded well to the coal miner's optimism. At 1035 AEDT, Whitehaven shares were 2.63% higher at $1.755 against a benchmark index slide of 0.03%. In earlier trade, Whitehaven shares hit as high as $1.7925.
In the six months to December 31, Whitehaven posted a net loss of $11.64 million, a 76% improvement on the $48.59 million loss posted in the previous corresponding half.
In the same period, revenue was $402.24 million, a 43% lift on the $280.75 million recorded in the first half of the fiscal 2013.
The miner said increases in revenue, cash flow, margins and earnings reflected a significant lift in volumes and a reduction in the group's cost of production.
"The 10% reduction in cost was due to increased efficiency at our mines and smarter asset utilisation from a range of initiatives," Whitehaven said.
The group declined to pay an interim dividend.
Whitehaven Coal managing director Paul Flynn said the outlook for the group was "very encouraging" as it expands capacity and continues to drive down costs.
"While not ignoring future potential for fluctuations in the coal price, we remain of the view that underlying demand continues to trend upwards for Australian coal and, in particular, for the higher grades of metallurgical and thermal coal where we are increasing capacity," he said.
"The fundamentals of the business are now showing some very encouraging upside and we believe we have enhanced our resilience to volatility on coal prices."
Whitehaven said the medium to long term outlook for coal remains strong, underpinned by expected growth in global energy demand over the next 20 years.
"This will be underpinned by emerging economies, particularly in Asia where significant new generating capacity is scheduled to come on line," the group said.
Coal is expected to continue to play a central role in supporting such growth due its reliability of supply and its cost competitiveness relative to other energy sources.
Whitehaven said the thermal coal market remains relatively well supplied for 2014, but noted that while this has recently impacted price levels, the inevitable rebalancing of supply is expected to benefit the group as a producer of high quality, low cost coals.
In fiscal 2014, Whitehaven expects to sell approximately 8.4 million tonnes on an equity basis, exclusive of purchased coal.