Yancoal’s 1H 2025 Profit Falls to $163M on 15% Revenue Drop and Supply Chain Woes

Profit Squeeze Amid Market Headwinds

Yancoal Australia Ltd’s half-year financial results for the six months ended 30 June 2025 reveal a challenging environment for the coal miner. The company’s net profit after tax plunged 61% to $163 million, a stark contrast to the $420 million reported in the same period last year. This sharp decline was primarily driven by a 15% fall in revenue to $2.62 billion, reflecting weaker global coal prices and a slight dip in sales volumes.

Production Gains Offset Sales Disruptions

Despite the profit setback, Yancoal achieved a 15% increase in saleable coal production, reaching 24.8 million tonnes on a 100% basis. This improvement was underpinned by stronger output from its key tier-one assets, Moolarben, Mount Thorley Warkworth (MTW), and Hunter Valley Operations (HVO), which collectively boosted production by 15%. However, sales volumes fell 2% to 16.6 million tonnes, largely due to supply chain bottlenecks caused by rail outages and port restrictions at Newcastle, leading to inventory build-ups.

Cost Efficiencies and Margin Pressure

Operating EBITDA declined 40% to $595 million, with the margin contracting from 32% to 23%. Encouragingly, cash operating costs per saleable tonne improved to $93, down from $101 in the prior period, reflecting operational efficiencies and a better product mix. Government royalties edged higher due to increased rates, while other operating expenses rose, partly due to foreign exchange losses and carbon credit costs under Australia’s Safeguard Mechanism.

Strategic Moves and Dividend Declaration

Yancoal is actively managing its portfolio, announcing a binding agreement to acquire an additional 3.75% interest in the Moolarben Joint Venture, increasing its stake to 98.75%. The transaction is expected to close in the third quarter of 2025. Additionally, the company signed an agreement to divest its non-core Donaldson Coal Complex to the Bloomfield Group, with no cash consideration but transfer of rehabilitation liabilities. Reflecting confidence in its cash flow, Yancoal declared a fully franked interim dividend of A$82 million (6.2 cents per share), payable in September 2025.

Outlook and Market Risks

Looking ahead, Yancoal targets full-year attributable saleable production between 35 and 39 million tonnes, with cash operating costs expected in the lower half of the $89–$97 per tonne guidance range. Capital expenditure is forecast between $750 million and $900 million. The company continues to pursue organic growth projects, including mine life extensions at HVO and MTW, though regulatory approvals remain uncertain. Market risks persist, including coal price volatility influenced by geopolitical tensions, trade tariffs, and the global energy transition, alongside operational risks from supply chain disruptions.

Sustainability and Governance

Yancoal maintains a strong commitment to sustainability, complying with Australia’s mandatory climate disclosure regime and advancing its P4 Sustainability Strategy. The company is exploring renewable energy projects and emission reduction technologies while managing environmental and social responsibilities. Governance frameworks remain robust, with ongoing oversight of climate-related risks and modern slavery compliance.