WHC -2.71%: FY26 numbers were understandably softer, with lower coal prices driving earnings down, but we think looking in the rear-view mirror misses the more interesting part of the story. FY27 should benefit from cost initiatives, improved rail pricing and materially lower financing costs, while the company is again buying back stock.
Key results:
- Revenue of A$5.40bn, broadly in line with A$5.39bn expected.
- Earnings (EBITDA) of A$1.25bn, down 8%.
- Operating cash flow of A$1.06bn, down 16%.
- Final dividend of 6cps.
FY27 guidance is for 38–41Mt of managed ROM production and 30.4–33Mt of coal sales, with unit costs of A$132–147/t. New NSW and Queensland rail contracts should improve pricing from July, while April’s refinancing is expected to save A$50–55m annually in interest. WHC will also undertake a buyback of up to A$47.3m.
MM’s view: The FY26 earnings decline wasn’t a huge surprise; what matters is that the business has several levers to improve returns even without assuming surging commodity prices. Lower financing costs, better logistics economics and continued cost-out should all help, while buybacks make sense when the market assigns a low multiple to the group’s long-life assets. We believe the risk/reward remains attractive and continue to hold it in our Active Growth Portfolio.
MM remains long and bullish WHC
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