Yancoal posts Q2 production increase, sales dip
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The news: Yancoal reported an increase in coal production during the second quarter, while sales dipped as a result of port closures. The company also expects a potential recovery in coal prices.
The numbers: Yancoal saw a 12% increase in ROM coal production compared to the previous quarter and the company is optimistic about meeting its full-year guidance. Yancoal maintains a $1.8 billion cash balance after paying a final dividend of $687 million ($0.52 per share) in April and completing an additional tax payment related to the FY2024 period.
Attributable production for the June quarter was down 1% from the March quarter to 9.4 million tonnes, while sales volume dropped 3% to 8.1 million tonnes.
The context: In a release published late on Thursday, Yancoal said that while attributable sales were lower than production due to temporary port closures at the Port of Newcastle (a results of weather events), it expects to reduce accumulated inventory to fully recover its sales position by September.
The miner said that volatility and economic uncertainty stemming from geopolitical events in the Middle East and the implementation of trade tariffs have not impacted underlying demand factors as yet.
While the international coal prices faced a soft pricing environment, Yancoal said that it is “beginning to see supply-side response to the lower coal prices, which aligns with our view that coal indices are well below marginal cost on the global cost curve.”
“We anticipate further supply-side reductions from higher-cost producers, contributing to a potential recovery in coal prices indices, as was the case with past coal price cycles.”
The source: Yancoal earnings
