New Hope Corporation Delivers Strong 35% Profit Growth Amid Expansion

About New Hope Corporation Limited

New Hope Corporation Limited (ASX: NHC) is a diversified energy company headquartered in Brisbane, Australia. Established in 1952, it has evolved into a significant player in the coal mining industry, with operations spanning coal extraction, exploration, port operations, oil, and agriculture. The company’s primary coal assets include the Bengalla Mine in New South Wales and the New Acland Mine in Queensland. New Hope has been publicly listed on the Australian Securities Exchange since September 2003.

Strong Half-Year Financial Performance

In its half-year financial results ending 31 January 2025, New Hope reported a net profit after tax of A$340.3 million, marking a 35% increase compared to the same period in the previous financial year. This substantial profit growth is attributed to increased production levels and effective cost management strategies.

The company’s saleable coal production rose by 32.9% year-on-year, reaching 5.4 million tonnes. This uptick was driven by the successful ramp-up of operations at the New Acland Mine and the attainment of steady-state operations at the Bengalla Mine, which is now operating at a run-of-mine rate of 13.4 million tonnes per annum following the completion of the Bengalla Growth Project.

Reflecting its strong financial performance, New Hope declared a fully franked interim dividend of 19.0 cents per ordinary share, an increase from the 17.0 cents per share declared in the previous corresponding period. Additionally, the company’s board has approved an on-market share buy-back of up to A$100 million as part of its capital management program, aiming to enhance shareholder value by reducing the number of shares on issue.

Strategic Investments And Expansion Plans

In line with its strategic objective to invest in low-cost, long-life coal assets, New Hope increased its equity interest in Malabar Resources Limited from 19.97% to 22.97% during the half-year period. This investment enhances the company’s exposure to high-quality metallurgical coal, which is essential for steel production.

Chief Executive Officer Rob Bishop highlighted the company’s focus on cost control and organic growth plans, stating that earnings have increased compared to the first half of 2024, despite a decline in coal prices. This outcome demonstrates the resilience of New Hope’s low-cost operations to fluctuations in coal prices.

Exploration Of Acquisition Opportunities

Looking ahead, New Hope is actively seeking acquisition opportunities to further diversify and strengthen its portfolio, particularly in the metallurgical coal sector. The company has expressed interest in EMR Capital’s Kestrel coal mine in Queensland, a significant asset in the coking coal market. Bishop noted that improving investor appetite for New Hope’s debt positions the company favourably to finance such acquisitions, reflecting a broader shift in the financial sector’s approach to coal investments amid ongoing energy security concerns.

The company also achieved a legal milestone during the half-year period by negotiating a settlement with the Oakey Coal Action Alliance, an activist group that had been opposing the expansion of the New Acland Mine. This settlement provides certainty for the community and clears the path for the mine to reach a production rate of approximately 5 million tonnes per annum by 2027.

Market Context And Industry Outlook

The coal industry has remained resilient despite shifting global energy policies. Demand for high-quality thermal and metallurgical coal continues to be strong, particularly from key export markets such as Japan, South Korea, and India. New Hope’s ability to sustain strong production levels and manage costs effectively positions it well to capitalise on these market dynamics.

With Australian coal prices experiencing volatility, the company’s strategic acquisitions and capital management strategies will play a crucial role in sustaining profitability. Investors are expected to closely monitor New Hope’s next moves, particularly regarding its potential acquisitions and continued production growth.