Yancoal Hits Record Coal Output Despite Price Slump, Declares Solid Dividend
Yancoal Australia delivered record coal production in 2025, boosting volumes by 7% even as revenue fell 13% due to lower coal prices. The company maintained a strong EBITDA margin and declared a fully franked final dividend, signalling confidence amid challenging market conditions.
- Record 67 million tonnes ROM coal production in 2025, up 7%
- Revenue declined 13% to $5.95 billion due to 17% drop in coal prices
- Operating EBITDA of $1.44 billion with 24% margin despite price pressures
- Cash operating costs reduced slightly to $92 per tonne
- 2026 guidance targets steady production with moderate cost inflation and $750-900 million capital expenditure
Record Production Amid Price Headwinds
Yancoal Australia Ltd has reported a standout operational year for 2025, achieving record run-of-mine (ROM) coal production of 67 million tonnes, a 7% increase over 2024. Saleable coal production also rose 6% to 50.8 million tonnes, placing the company near the top of its guidance range. This strong volume growth was a bright spot in a year marked by a significant 17% decline in realised coal prices, which dragged revenue down 13% to $5.95 billion.
Financial Resilience and Cost Discipline
Despite the challenging pricing environment, Yancoal maintained an operating EBITDA of $1.44 billion and a resilient EBITDA margin of 24%. The company’s cash operating costs edged down by $1 per tonne to $92, helped by productivity gains and increased volumes, although these were partially offset by higher demurrage costs mid-year. This disciplined cost management cushioned the impact of lower prices and helped preserve profitability.
Shareholder Returns and Strong Balance Sheet
The board declared a fully franked final dividend of A$0.122 per share, bringing the total payout ratio for 2025 to 55%. This follows a combined return of A$769 million to shareholders through the 2024 final and 2025 interim dividends. Yancoal ended the year with a robust cash balance of $2.1 billion, providing a solid financial foundation and flexibility to pursue growth opportunities or return further value to shareholders.
Outlook: Operational Momentum and Cost Inflation
Looking ahead to 2026, Yancoal has set attributable saleable production guidance between 36.5 and 40.5 million tonnes, reflecting confidence in sustaining operational momentum. The company anticipates cash operating costs rising modestly to between $90 and $98 per tonne, accounting for expected cost inflation. Capital expenditure is forecast at $750 to $900 million, including projects deferred from 2025. CEO Sharif Burra emphasised the company’s focus on balancing cost control with market responsiveness amid improving coal price indices.
Navigating Market Uncertainties
While international coal markets remain well supplied, recent improvements in price indices offer a cautiously optimistic backdrop. Yancoal continues to work closely with customers to optimise its product mix and meet evolving demand. The company’s strong cash position and access to debt markets provide a buffer against volatility and the capacity to capitalise on growth opportunities as they arise.
Bottom Line?
Yancoal’s record production and disciplined cost management have positioned it well for 2026, but coal price volatility remains a key watchpoint.
Questions in the middle?
- How will Yancoal manage potential cost inflation beyond current guidance?
- What strategies will the company deploy to navigate ongoing coal market oversupply?
- Could Yancoal increase shareholder returns if coal prices improve further?
