Yancoal’s 16% Production Rise Offset by 15% Revenue Drop in 1H 2025

Production Growth Despite Market Headwinds

Yancoal Australia has delivered its strongest first-half coal production in five years, with run-of-mine (ROM) coal output rising 16% to 32.2 million tonnes compared to the same period last year. Saleable coal production also increased by 15% to 24.8 million tonnes, reflecting operational improvements and higher volumes across its mining portfolio.

However, this production growth has not translated into higher revenue. The company reported a 15% decline in revenue to $2.68 billion, primarily due to a 15% drop in realised coal prices, which fell to an average of $149 per tonne. Additionally, sales volumes were slightly down by 2%, impacted by temporary weather-related disruptions to rail and port logistics, which delayed shipments into the second half of the year.

Financial Performance and Cost Management

Operating EBITDA fell sharply by 40% to $595 million, with the EBITDA margin contracting to 23%, reflecting the challenging pricing environment for both thermal and metallurgical coal. Despite these pressures, Yancoal successfully reduced its cash operating costs by 8% to $93 per tonne, driven by productivity initiatives and higher output that helped offset inflationary cost pressures.

The company ended the period with a robust cash balance of $1.8 billion, providing a strong liquidity buffer amid volatile market conditions. Reflecting confidence in its financial position, the board declared a fully franked interim dividend of A$0.0620 per share, maintaining a payout ratio consistent with company policy.

Outlook and Market Dynamics

Yancoal’s production guidance for 2025 remains unchanged, targeting attributable saleable production between 35 and 39 million tonnes. The first half’s performance suggests the full-year output could reach the upper end of this range. Operating costs are expected to stay within the $89 to $97 per tonne guidance band, with potential for further reductions.

The company’s acting CEO, Ning Yue, highlighted ongoing market challenges, including subdued demand and geopolitical tensions affecting speculative trading. However, supply-side responses to lower coal prices are emerging, with higher-cost producers likely to reduce output. This dynamic could support a recovery in coal prices over the next 12 to 18 months, potentially improving Yancoal’s financial results in the medium term.

Yancoal is also focused on aligning sales volumes with production by year-end after inventory built up due to earlier shipment delays. The company’s strong cash position and access to debt markets provide flexibility to pursue growth initiatives that could add value for shareholders.