Why Yancoal shares are sinking 10% despite record production in FY25

Shares in Yancoal Australia Ltd (ASX: YAL) are under pressure on Thursday after the coal producer released its full-year results for 2025.

In late morning trade, the Yancoal share price is down 10.55% to $5.51. Despite today’s pullback, the stock remains up around 10% in 2026 amid more supportive coal prices.

Here is what the company reported for the year ended 31 December 2025.

Record output, but prices weigh on earnings

Yancoal delivered record production in FY25. Run-of-mine coal production rose 7% to 67 million tonnes on a 100% basis. Attributable saleable production increased 5% to 38.6 million tonnes, toward the top end of guidance.

However, lower realised coal prices drove weaker financial results.

Revenue fell 13% to $5.95 billion. The average realised coal price declined 17% to $146 per tonne, reflecting softer thermal and metallurgical coal markets compared to the prior year.

Operating EBITDA dropped 44% to $1.437 billion, with the margin contracting to 24%. Net profit after tax (NPAT) came in at $440 million, down 64% year on year.

The company noted that lower prices flowed through directly to EBITDA and net profit.

Costs remain controlled

While prices fell, costs were stable.

Cash operating costs were $92 per saleable tonne, down 1% from FY24 and below the midpoint of guidance. The implied cash operating margin was $39 per tonne.

Management said higher production volumes, mine plan optimisation, and equipment utilisation helped offset cost inflation and temporary shipping-related costs earlier in the year.

Looking ahead to 2026, Yancoal has guided to attributable saleable production of 36.5 to 40.5 million tonnes. Cash operating costs are expected to range between $90 and $98 per tonne, allowing for some inflation.

Strong balance sheet supports dividend

Yancoal ended the year with $2.1 billion in cash and no interest-bearing loans. Net cash has been maintained since the end of 2022 following significant debt repayments in prior years.

Operating cash flow for FY25 was $1.26 billion.

The board declared a fully-franked final dividend of $0.1220 per share, representing $161 million. This brings total dividends for FY25 to 55% of full-year profit after tax.

The dividend is scheduled to be paid on 15 April 2026.

Coal market backdrop

Thermal coal markets were marked by strong supply and relatively soft demand conditions through much of 2025. Metallurgical coal demand was also subdued, partly due to softer global steel conditions.

However, management pointed to improving coal price benchmarks more recently. Industry forecasts continue to show resilient demand across parts of Asia, with supply growth constrained by reserve run-down and limited new project development.

Given its scale, low-cost operations, and net cash balance sheet, Yancoal is well placed to manage ongoing price volatility.

Whether today’s share price weakness proves temporary may depend on how coal prices track through 2026.

The post Why Yancoal shares are sinking 10% despite record production in FY25 appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.