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Why the New Hope (ASX:NHC) share price is in focus

The New Hope Corporation Ltd (ASX: NHC) share price is one to watch in early trade after the Aussie coal miner slashed its interim dividend.
The post Why the New Hope (ASX:NHC) share price is in focus appeared first on The Motley Fool Australia. –

pair of scissors cutting one hundred dollar note representing cut dividend

The New Hope Corporation Ltd (ASX: NHC) share price is one to watch after the coal miner’s half-year results announcement.

Why is the New Hope share price on watch?

Today, New Hope reported its half-year results for the period ended 31 January 2021 (1H 2021). The Aussie miner reported what it called a “solid performance” despite a “depressed energy market”.

Both pricing and volumes fell during the quarter and weighed on revenue and earnings. Total tonnes sold fell 23% from 2020 to 4.9 million while the realised sales price of $78.8 per tonne was down 19% on 2020 figures.

Revenue from operations consequently slumped 34% to $405.5 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) before non-regular items fell 62% to $81.2 million.

The New Hope share price is worth watching given the significant profitability hit during the period. That includes a 99% drop in profit before income tax (before non-regular items) to $0.9 million.

Shareholders will also be watching the interim dividend announcement from today’s results. New Hope slashed its interim dividend by 33% to 4.0 cents per share as a result of reduced profits.

The coronavirus pandemic has crimped demand for energy around the world and hit commodity prices hard. That lack of demand saw New Hope’s EBITDA margin fall 41% from 2020 to 20% in 1H 2021.

Higher NSW and Queensland costs during the second quarter weighed on that EBITDA result. Bengalla coal production fell 16.3% from 2020 to 4.6 megatonnes while Queensland operations produced 0.9 megatonnes, down 43.8% from 2020.

Cash generated from operations slumped 58% to $70.2 million for the period. Profit after tax and non-regular items fell 179% as New Hope posted a $55.4 million net loss. On the balance sheet side, New Hope’s gearing ratio came in at 14% and the company remains in compliance with all debt covenants.

New Hope is forecasting “continued strong performance” at Bengalla with targeted cost reductions across the business. The miner said coal prices are expected to stabilise in the short and long term with good demand from Asian markets.

Foolish takeaway

The New Hope share price is one to watch in early trade after this morning’s half-year report. Revenue and earnings slumped for the year due to a depressed energy market despite Bengalla sales coming in better than expected for the period.

New Hope slashed its interim dividend by 33% to 4.0 cents per share as a result of lower profit and a focus on capital management.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the New Hope (ASX:NHC) share price is in focus appeared first on The Motley Fool Australia.

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