I had similar questions to the above in terms of thinking the...

I had similar questions to the above in terms of thinking the the export EBITDA looked low, having read the Sept 14 powerpoint and the June quarterly report it looks like there are a few things going on:

• Bathurst export coal only achieves 75% of benchmark coking coal price so the USD$152/t increase reduces to US$114/t or about NZD$156/t (I used their forecast fx rate). I tend to think of the 75% of benchmark and NZD/USD FX rate (73c) as cancelling each other out for simplicity when converting back to NZD/t.
• Judging by the gap between production and sales, about 100-150kt of export coal is purchased each year to blend with Bathurst coal. This cost will obviously rise, with minimal profits likely on what amounts to 10-15% of sales.
• Lag in pricing - at 30 June there was 242kt hedged at NZD 211/t. This is virtually a quarters worth of sales at about US$150/t. You can see this in the flat line of about US$200 for the Sept 21 Quarter on the Page 20 export pricing slide. (remember Export coal only achieves 75% of coking coal benchmark thus the reduction back to US$150/t)
• Again on the pg20 export pricing slide, management are forecasting a guidance price below the market forward curve as at 10 Sept, this would reflect any hedging they already had in place and a conservative view of pricing moving forward which is sensible given current volatility.
• There are two thermal/industrial boats in FY22 - compared to none in FY21 - I think the first ships in Q1 FY22
• I think management tend to be conservative in their forecasts and I suspect they would have held back some upside in their forecast even when they released their updated guidance (which was based on Sept 10 forward pricing curve). At this time the benchmark price was around US$300/t.

Based on the June hedging and likely Q1 thermal shipment, I suspect Q1 will have a relatively 'disappointing' group EBITDA which may be as low as $15m. Depending on the timing and amount of hedging I would expect to see EBITDA to build significantly in Q2, Q3 and Q4. Very roughly each NZ$50/t would add about $8m EBITDA per quarter, at a realised price of NZ$250/t we are looking at about $29m group EBITDA per quarter and at the currently insane US$400/t plus spot price we are looking at $53m group EBITDA per quarter, which would annualise to an EBITDA of $212m/year . (Note I rounded the 75% of benchmark price and the assumed 73cent NZD/USD rate back to NZD$400/t).

In summary we may need just a little more patience before we see some very high quarterly profits and cashflows realised but they are definitely coming. I suspect any potential dividends/share buy back announcements would not occur until the New Year but we may get a pleasant surprise either when the annual report is released in October or at the AGM in November.

Please note all figures are approximate and based on my read and understanding of the financial information available, there is likely to be other factors causing volatility in the quarterly EBITDA which I am not aware of. DYOR