The value of Nathan Tinkler’s investment in Whitehaven Coal has taken another dive after the company more than halved its earnings forecasts.
Operating earnings in the six months to December 31 will be below $10 million, and could be similar in the second half of the 2012/13 financial year “if coal markets and the high Australian dollar remain unchanged”, Whitehaven said on Thursday.
Full year earnings of under $20 million would be substantially lower than Whitehaven’s previous forecast of about $50 million.
Analysts had previously forecast full year earnings before interest, tax, depreciation and amortisation (EBITDA) of about $185 million.
Whitehaven shares dropped 19 cents, or 5.48 per cent, to close at $3.28, their lowest point since December 18.
That takes the value of Mr Tinkler’s 21 per cent Whitehaven stake down to about $703 million, from $1.1 billion when Whitehaven merged with his company Aston Resources in April 2012.
Mr Tinkler has been suffering cash flow problems for several months, leading to several of his companies facing legal action to recover funds and his racehorse operations being scaled back.
Whitehaven said its revenue has been depressed by weak coal prices and the high Australian dollar.
At current dollar and price levels, net revenue for thermal coal remains at or below cash costs per tonne, it said.
The value of Whitehaven’s coal has also been negatively affected by a high moisture content in coal from its Narrabri mine, reducing the energy of the coal.
That coal has to be sold in lower-priced coal markets, it said.
High moisture content is expected to persist into the second half of the financial year, although an improvement is expected in the final three months, Whitehaven said.
But the company expects to write down the value of its coal inventory as a result, and adjust the value of some assets due to a maintenance shutdown of its Sunnnyside mine and a train derailment at Boggabri.
That will further dent Whitehaven’s net profit for the six months to December, which will be revealed on February 26.
Whitehaven’s financial problems come despite improved production at its mines, with first half production up 68 per cent from the same period last year, and sales up 19 per cent.
