Whitehaven Coal (ASX:WHC) Smashes Q2 Expectations With 21% Production Surge- Is It Time to Buy?

Whitehaven Coal Rallies After Q2 Output Surge

Whitehaven Coal (ASX: WHC) gained nearly 3 per cent on Thursday after delivering a Q2 FY26 production report that beat market expectations. Managed run-of-mine production reached 11 million tonnes, up 21 per cent from the September quarter, driven by stronger output from both Queensland and New South Wales operations. For investors watching Australia’s largest pure-play coal producer, this result raises an important question: with the stock trading at fresh 52-week highs, is there still upside left, or is it time to lock in gains?

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Whitehaven Coal Delivers Strong Results Across Queensland and NSW

The standout figure was Queensland production. ROM output from the Blackwater and Daunia mines reached 5.6 million tonnes, beating the consensus estimate of 4.82 million tonnes by 16 per cent. This suggests the integration of the former BHP assets is progressing better than expected.

New South Wales operations also contributed, with equity coal sales climbing 18 per cent to 7 million tonnes. The Narrabri underground mine continues to support Whitehaven’s thermal coal portfolio alongside its growing metallurgical exposure.

Total first-half production reached 20 million tonnes, setting a strong foundation for FY26. Favourable weather conditions in Queensland helped boost output, though investors should recognise that weather can swing both ways.

Cost Control Strengthens the Investment Case

Beyond production volumes, the cost discipline impressed us. First-half unit costs came in at around AUD 135 per tonne, at the lower end of guidance. This matters because it shows Whitehaven Coal can protect margins even if coal prices soften.

The company remains on track to deliver AUD 60 to 80 million in annualised cost savings by June 2026. Net debt has also reduced, though Whitehaven still has a US$500 million deferred payment due in April 2026. Management has indicated this payment is already covered by proceeds from the Blackwater stake sell-down.

The Investor’s Takeaway

Here’s where the picture gets more complicated. On the bull side, Morgan’s equity analyst Christopher Creech highlighted that Whitehaven Coal remains their preferred pick among coal producers. Creech noted the company’s strong cash flow, production capabilities, and advantageous position should coal prices rebound above current consensus estimates.

The shift towards metallurgical coal also strengthens the long-term story. Management expects met coal to represent around 60 per cent of production by 2030, up from around 40 per cent currently. Asian demand from India and Southeast Asia remains robust, providing structural support for volumes.

However, not everyone is bullish. CLSA recently downgraded Whitehaven to Underperform with a price target of just AUD 4.60. The average analyst target sits around AUD 7.24 to 7.48, which is actually below where the stock trades today at AUD 9.46. Coal price volatility remains a real risk, and ESG-related selling pressure could return if sentiment shifts.

For investors already holding Whitehaven Coal, the Q2 beat supports staying the course. The operational execution has been impressive, and the cost control provides a buffer against weaker pricing. For new buyers, the risk-reward appears less compelling at current levels. Consider waiting for a pullback or watching for continued execution before adding to positions.