The New Hope Corporation Limited (ASX: NHC) share price is having a difficult day.
In afternoon trade, the coal miner's shares are down a sizeable 8% to $5.44.
This makes the New Hope share price the worst performer on the ASX 200 today.
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Why is the New Hope share price under pressure?
There appear to have been a couple of reasons for the weakness in the New Hope share price.
The first is a particularly poor showing from coal miners. Rivals Coronado Global Resources Inc (ASX: CRN) and Whitehaven Coal Ltd (ASX: WHC) are also down sharply. This is potentially due to concerns over demand in China amid soaring COVID cases.
In addition, this morning New Hope released its quarterly update.
And while the coal miner reported a huge profit jump, it would have been so much stronger but for weaker production because of wet weather and skilled labour shortages.
According to the release, New Hope reported a 167% increase in underlying EBITDA to $648.1 million. This was driven by record thermal coal prices, which was partially offset by a 10.4% decline in production quarter on quarter.
In light of this, the company is expecting its full year production to fall 1% year over year in FY 2023.
One positive, though, is that management expects coal prices to remain high. At its annual general meeting it commented:
The financial results for the first quarter of the 2023 Financial Year are in line with our expectations, with a first quarter Underlying EBITDA of $648 million, an increase of 167% from the same quarter last year. The financial performance reflects the current high price environment driven by a shortfall of supply against demand in the market given weather disruptions on top of the historic under investment in our industry.
At the start of the quarter, we were seeing exceptionally high prices as the northern hemisphere started restocking for winter. Price has since come off slightly due to the warmer winter currently being experienced, but we do expect prices to remain stable, or increase as Europe moves into the middle of winter.
