WHC -3.17%: hit today on a production downgrade, although the worst of it was seen early with the stock down ~7% at the lows. They said production would be lower than expected in the March quarter due to Labour shortages, and this has impacted FY23 guidance to the tune of 1Mt – or around 5.5% of total volumes. Lower product = higher costs which will increase by $5/Mt. Not good but not a disaster with the company saying the average coal price in the March quarter was $400/Mt (still benefitting from strong prices in 2H22), still a very nice margin even with revised cost guidance of $100-$107/Mt. They finished the quarter with net cash of $2.7b while there remains the strong possibility of higher energy prices in 2H23 as Europe rebuilds inventories ahead of winter.
MM remains bullish WHC <$7.00 despite today’s negative update.
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