Earnings call transcript: New Hope Group’s Q4 2025 sees strong EBITDA despite challenges

New Hope Group (NHG) reported its Q4 earnings, highlighting a robust full-year underlying EBITDA of $766 million, marking it as the fourth highest in the company’s history. Despite a 40% decrease in Q4 EBITDA compared to the previous quarter, the company maintained its position as a low-cost producer amid global market challenges. According to InvestingPro analysis, the company maintains a "GREAT" financial health score of 3.54 out of 5, with particularly strong profitability metrics. The stock closed at $4.54, down 4.19% from the previous trading session, reflecting investor concerns over logistics constraints and weather disruptions affecting coal production. Current analysis suggests the stock may be trading below its Fair Value.

Key Takeaways

• Full-year underlying EBITDA reached $766 million, the fourth highest in NHG’s history.
• Q4 EBITDA decreased by 40% from the previous quarter.
• Coal production increased by 18% year-on-year.
• Logistics issues and weather events in New South Wales impacted operations.
• Stock price declined by 4.19% following the earnings announcement.

Company Performance

New Hope Group demonstrated resilience in Q4 2025, despite facing significant operational challenges. The company achieved an 18% year-on-year increase in saleable coal production, reaching 10.7 million tons. However, logistics constraints and weather disruptions in New South Wales led to a dip in quarterly EBITDA. The company remains a low-cost producer, leveraging operational efficiencies to navigate market pressures.

Financial Highlights

• Full-year underlying EBITDA: $766 million
• Q4 underlying EBITDA: $93 million (40% decrease from previous quarter)
• Operating cash flows: $571 million
• Available cash: $7 million
• Group saleable coal production: 10.7 million tons (18% increase year-on-year)

Outlook & Guidance

Looking ahead, New Hope Group anticipates improvements in logistics issues and is focusing on cost management to enhance production efficiency. The company plans to increase production to a targeted 13.4 million ROM tons. Strategic initiatives include the Malabar project, which is on track for first longwall coal in Q1 2026, and the commencement of mining at the Vale West pit in 2026. InvestingPro data reveals the company has maintained dividend payments for 22 consecutive years, with a current dividend yield of 2.38%, demonstrating consistent shareholder returns. The company’s beta of 0.59 indicates lower volatility compared to the broader market.

Executive Commentary

CEO Rob Bishop emphasized the company’s resilience, stating, "Despite lower thermal coal prices, the group achieved an underlying EBITDA of $766 million." He acknowledged the external challenges, noting, "We’re comfortable that we’re doing everything we can, but there is a certain piece of it which is out of our control." CFO Rebecca Arnaldi highlighted the company’s strategic approach towards share buybacks, stating, "We will continue to use the share buyback when we see the time is right."

Risks and Challenges

• Logistics constraints at the Port of Newcastle, with approximately 60 ships waiting off the coast.
• Weather disruptions impacting coal production and transportation.
• High inventory levels at Bengala and New Ackland mines.
• Potential pricing variations due to ash content and contract structures.
• Exposure to Bowen Coking Coal loan facility, amounting to $45 million.

Q&A

During the earnings call, analysts inquired about the company’s high inventory levels and the impact of logistics constraints on future production. Executives addressed concerns regarding pricing variations and clarified expectations for unit cost performance. The discussion also covered the company’s exposure to the Bowen Coking Coal loan facility and its implications for financial stability.

Full transcript - New Hope Corporation Ltd (NHC) Q4 2025:

Rob Bishop, Chief Executive Officer, New Hope Group: Good morning, everyone. Thank you for joining our call today. I’m Rob Bishop, Chief Executive Officer at New Hope Group. I’m joined here by Rebecca Arnaldi, our CFO and Dom O’Brien, our Executive General Manager and Company Secretary. This morning, we released our quarterly report for the 2025 financial year.

Hopefully, you’ve had a chance to go through the report, but in any case, I’ll briefly step you through our key highlights before we open up the line for Q and A. The July marks the end of the 2025 financial year for New Hope. Whilst our final quarter was impacted by significant weather events in New South Wales, our business continues to remain resilient as we increase saleable coal production year on year and execute on our organic growth pipeline. Looking at safety, our twelve month moving average TRIFR was 3.22 at the end of the quarter, which was 12% lower than the previous quarter. Safety will always be a key focus for us and I’m pleased to say that we have made meaningful improvements in this area during the year with both our TRIFR and our all injury frequency rate materially improving.

Operationally, our New Ackland mine in Queensland achieved its most productive quarter since recommencement of operations. However, our fourth quarter result was largely impacted by significant rainfall in the Hunter Region. Rain and flooding led to logistics constraints, including material increases and rail cancellations and extensive shipping delays at the Port Of Newcastle, which impacted operations at Bengalah Mine. During the quarter, we moved 16,100,000 BCMs of prime overburden in line with the previous quarter despite the drag line at Bengalah Mine being unavailable for fifty days as it underwent planned maintenance. Group runner mine coal production was 4,100,000 tons, largely in line with the previous quarter with the group strip ratio remaining steady at four Bcms per ton.

As I mentioned earlier, flooding across the Hunter region resulted in restricted vessel movements and extended shipping cues at the Port Of Newcastle. In addition, rail cancellations caused by both weather impacts and external labor availability led to site stock management challenges with Bengala mine becoming stock bound throughout the quarter. As a result, group saleable coal production was 2,500,000 tons, 9% lower than the previous quarter. Log production at Bengala mine was offset by strong performance at New Ackland mine, which increased saleable coal production by 33% for the quarter, following improved rail performance and increased stockpile capacity. In terms of financials, the group underlying EBITDA of $93,000,000 was down 40% on the previous quarter due to lower coal sales out of the Port Of Newcastle and lower realized pricing.

Turning to our full year results. Despite a challenging final quarter, our team delivered another strong results this financial year. Group saleable coal production was 10,700,000 tons and 18% increase on the previous quarter sorry, previous year and within guidance range. Bengala mine achieved an FOB cash cost excluding royalties of $76.5 per sales ton within guidance range. This represents a 2% reduction compared to FY 2024 and is a fantastic result considering the lower volumes overall and operational logistic challenges in Q4.

Despite lower thermal coal prices, the group achieved an underlying EBITDA of $766,000,000 the fourth highest earning result in the company’s history, reflecting our low cost operations and continued production growth. We generated $571,000,000 in operating cash flows and finished the year with available cash of $7.00 $7,000,000 which supports strong shareholder returns. Overall, in light of the current global market and local weather related challenges, we are pleased with our ability to remain resilient, low cost producer and we look forward to sharing our full year results in September. I’ll now hand over to the operator to start the Q and A session.

Operator: Thank Your first question today comes from Daniel Roden from Jefferies. Please go ahead.

Daniel Roden, Analyst, Jefferies: Rob, Rebecca and Rob. I just wanted to firstly ask on, I guess, the inventory at both Bangala and New Acklands. We’re hitting quite high inventory levels of both of the assets. And you kind of noted specifically at Bengaluru, I guess, curbing CSPP throughput just due to restrictions in, I guess, inventory capacity. I guess, what’s the expected rates of unwind into, I guess, over the next few periods?

And do you have any ability to increase, I guess, site capacity to, I guess, whether a bit more of that inventory builds in the near term?

Rob Bishop, Chief Executive Officer, New Hope Group: Yes, it’s a good question. You’re quite right. Stock levels are quite high across both sides and that’s really, as I’ve mentioned, a result of the logistics impacts, which both sides have seen and particularly at Bengalah. Unfortunately, I guess we begin the year with another fairly major weather event down in the Hunter Valley. So we’re sitting at probably about 60 ships off the coast from the port, which is hampering getting coal off-site.

But I guess having said that, we’ve had some good interactions with rail provider and with the port and it is being managed well. But it really is, I guess, reliant on continued good conditions and improving to get that coal off-site. So we’re fairly confident it will improve. But obviously, it hasn’t been a great end to our financial year and nor the start of the year. But we’re confident it will improve and we’re certainly doing everything we can to improve that downstream logistics space.

Daniel Roden, Analyst, Jefferies: Okay. And I guess, are there other, I guess, failing, I guess, improved conditions on the rail and shipping? Like are there other opportunities you could explore in terms of, guess, capacity or resource sharing between other operations in your neighborhood?

Rob Bishop, Chief Executive Officer, New Hope Group: Yes. I mean, we are looking at everything both from stockpile management, also the parties we’re working with both from a rail and port perspective, we’re keeping our options open there. So we can pull the trigger on any pivoting coal to another solution, which will get coal down the line. But certainly, we’ve got ample stockpile capacity from a ROM perspective on-site. And with the recent growth project, which we’ve had at Bengal, which is well embedded in now, we’ve got the increased throughput through the prep plant when needed.

So I guess we’re comfortable that we’re doing everything we can, but there is a certain piece of it, which is out of our control. And it’s really how we bounce back from that is probably the key thing.

Daniel Roden, Analyst, Jefferies: Yes, that makes a lot of sense. Okay. And I just wanted to touch as well on the, I guess, realized pricing. Bengalis realized pricing, I think, was pretty in line with expectations, but you know, it was quite soft at New Acklands. So it was not just a function of, you know, I guess when when I run some numbers on, you know, quick numbers on a on a sheet, you know, even accounting for, you know, higher ash sales and, the change in, I guess, sales mix, I’m still seeing a bit of a soft print.

Do you mind shedding a bit more color on, I guess, what the sales outlook what happened in the quarter from a pricing perspective there, please?

Rob Bishop, Chief Executive Officer, New Hope Group: Yes, sure. So I think if you look at the pricing for the quarter, I guess the realized pricing was down a bit, I guess compared to benchmark. But you did touch on the high ash portion. We did have a higher ash portion of sales during the quarter, which did I guess push down our average realized price across the whole portfolio across both mines. That’s really just a timing issue.

And I think there’s also a bit of a lag effect with the pricing as it comes through given how our contracts are negotiated and constructed. So I guess the key thing is our sort of average of high ash to low ash hasn’t changed from historical levels. It’s really just a timing issue, which we saw in this quarter.

Daniel Roden, Analyst, Jefferies: Okay. And was there a high delivery into domestic contracts in the quarter? And does that have a different pricing, I guess, mechanism behind it?

Rob Bishop, Chief Executive Officer, New Hope Group: There is a so that’s on a fixed term basis for our high ash domestic sales, which is the majority of that is at the Bengalamine. But yes, I mean, it’s not tied to a benchmark like most of our export sales are.

Daniel Roden, Analyst, Jefferies: Okay. And I’ll slip on one if I can. The Boeing Bowen Coking Coal, I guess, loan facility, how how much of that was drawn? How much is undrawn? And, you know, I know I know it’s something that’s being watched, but I guess what are your expectations around the, $70,000,000 obligation originally like you see that as likely to be recoverable if it’s fully drawn by the Queensland government?

Rob Bishop, Chief Executive Officer, New Hope Group: So with that facility, we’ve got a sense here about a $45,000,000 exposure for a rehabilitation bank guarantee, which is in place with the government. So that’s our exposure there. So it’s $45,000,000 Obviously, it’s unfortunate where Bowen’s at with administrators and now receivers appointed. We’re obviously keeping a close eye on that. And our expectation is that it’s not likely that the bank guarantee will be drawn upon.

But at this stage, we just need to see how the administration and the receivership folds out and whether there’s a successful sale process out the other side.

Daniel Roden, Analyst, Jefferies: Okay. Thanks, Rob. Appreciate your answers. Thank you. No problem.

Operator: Thank you. Your next question comes from Rob Stein from Macquarie.

Rob Stein, Analyst, Macquarie: Just drilling into Bengalar issues in a little bit more depth. Can you give us a feeling for in terms of monthly sort of run rate, how you’re sitting towards the July, how we would expect the operation to respond in the next quarter? Is this we’re just trying to get a feel for is this a permanent difference or a temporary difference in this catch up?

Rob Bishop, Chief Executive Officer, New Hope Group: It’s I think essentially, and I touched on in the last few questions. Run rate in July sorry, in August, which is our first month of our year has been hampered. And again, that’s really due to off-site logistics impacts both at the port and with the rail provider. It’s certainly not a permanent issue, but certainly our results for August will be a bit lighter than what we would have liked. But certainly, we expect to catch it up in following months as the logistics piece turns to normal again.

Rob Stein, Analyst, Macquarie: And given overburden was flattish, are we expecting that those impacts to be sort of worked through is hopefully things dry out and you can sort of catch up on movements and sort of get back ahead of your mine plan?

Rob Bishop, Chief Executive Officer, New Hope Group: Yes, I mean, we’ve got the ability to operate in fairly wet conditions now with the recent modification approvals. So on-site overburden movement is still pretty strong. We did we were impacted by dragline shut during year just gone. I was down about fifty days, but certainly operations on-site remained strong. So obviously, we have been stopped out, we’ve continued to pivot our operations to continue maximizing overburden movement and ROM production, albeit that we probably leave some in situ while we’re waiting for the prep plant to start up again.

But certainly from an overburden movement perspective, we expect that to remain strong and sort of get to that circa sort of $13,400,000 ROM level, which is the key behind our growth plans at recent.

Rob Stein, Analyst, Macquarie: And sorry, just a quick one on Malabar. To your from your point of view, construction or ramp up hasn’t been hampered by the wet weather. Things are looking reasonable in that neck of the woods?

Rob Bishop, Chief Executive Officer, New Hope Group: Yes, I mean, operations tend not to get impacted as much by wet weather. There is probably a slight impact with the surface construction for the development, but nothing material, nothing really that would impact getting to first longwall coal, which is due first quarter next calendar year, so calendar year 2026.

Rob Stein, Analyst, Macquarie: Brilliant. Thank you.

Operator: Thank you. Your next question comes from Jonathan Cha from CLSA. Please go ahead.

Jonathan Cha, Analyst, CLSA: Yes. Morning, Rob and team. Just two questions from me. The first one, just given Bengal’s unit cost jumped above $100 a tonne, how should we think about the costs sort of trending into FY 2026 as sales normalize? And how long do you think it will take for unit cost to normalize if they do?

Thanks.

Rob Bishop, Chief Executive Officer, New Hope Group: So I think Bengalis unit cost was probably the standout performance wise. So the figure you’re quoting that might include royalties.

Rebecca Arnaldi, CFO, New Hope Group: So excluding royalties at 76

Rob Bishop, Chief Executive Officer, New Hope Group: So point I guess a strong result despite the fact that we were hampered with production levels during the quarter. So we expect if we had more production that would have been even lower. So I think moving forward, expect that to continue. Cost is a big focus for the business. So that will help us remain resilient during these low coal price times.

Jonathan Cha, Analyst, CLSA: Okay. Thanks. And second question for me, you may have already said this in the past, but first of for me is as Maxwell transitions from development to longwall production and with Malabar’s shareholder base expected to likely evolve, how do you think about New Hope’s role there? Would you be comfortable remaining a passive investor? Or would you consider taking a more strategic or even being the operator there?

Rob Bishop, Chief Executive Officer, New Hope Group: Yes. So you’re quite right. It is sort of at the pointy end of this development. The longwall, as I said before, should ramp up or begin essentially first quarter next year. Autumn pillars started to get good consistency as well.

So Wayne and the team on-site are doing an excellent job of getting that asset ready for good consistent production. Currently from, I guess, a shareholder perspective, we’re sitting just under 23%. We’re very happy with the shareholder group. There are a lot of experienced individuals and all very supportive of the project. If we were approached for more equity, we’d obviously consider it.

We’ve quite often told you the strategic criteria for which we look at investments and Malabar up to now certainly fit within that criteria.

Jonathan Cha, Analyst, CLSA: Okay. Thanks, Rob. I’ll leave it there.

Operator: Thank you. As there are no further phone questions at this time, we will now pause briefly and address any webcast questions. The first question from the webcast states, it doesn’t seem like you have spent much time on share buyback. Have you put any of that on hold for now?

Rebecca Arnaldi, CFO, New Hope Group: Yes, thank you. We have taken a conservative approach with the share buyback. When we announced the buyback back in March 2025, we did see value in the share price and our assets at that point were very undervalued in our eyes. Now off the back of March 2025, we have seen significant volatility in the market. And I guess given this volatility, we really wanted to tread carefully and not rush the pace of the buyback.

So we really pulled it back as you would have seen with our announcements, and we kind of all in today at three dollars sixty per share, which is we see that as a valuable price to buy back shares. You know, we will see we’ve seen a big uplift in the share price recently, and we continue to use the share buyback when we see the time is right. But at the moment, we probably see there’s more value in dividends for our shareholders.

Operator: Thank you. Your next question from the webcast states, can you please provide an update on mining in the Mining Vale West pit at New Ackland?

Rob Bishop, Chief Executive Officer, New Hope Group: Sure. So at this stage, we’re targeting mining to commence in the 2026. To get over to that pit, there’s surface infrastructure works that need to happen including access roads and various other construction pieces. So that is a focus for the moment. And then the intention is to open up the third pit to give us flexibility across the whole mine.

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