Fin24 | Exxaro profits hit by weaker coal prices, logistics problems

Fin24 | Exxaro profits hit by weaker coal prices, logistics problems

Exxaro posted softer results on Thursday.

Exxaro posted softer results on Thursday.

Exxaro Resources has reported a 32% drop in interim profit and a 29% drop in headline earnings per share driven by lower thermal coal prices, sub-par rail performance and lower Eskom offtake.

The company reported a decline in profit to R6.3 billion for the first half of the year, compared to R9.2 billion in the first half of 2022.  

Headline earnings per share of R24.43 had decreased from R34.26 in the comparative half. Group revenue declined 15% to R18.9 billion – down from R22.3 billion in the first half of 2022.

Overall coal production volumes were down by 7% to 20.2 million tonnes.

The company’s performance was hit by declining coal prices, which slipped by over 60% from the highs of 2022, and lower production volumes due to sub-par rail performance and lower offtake from Eskom arising from equipment unavailability.

The group CEO, Nombasa Tsengwa, remarked on its resilient performance in the face of these challenges:

Notwithstanding the many obstacles we have continued to face during the first half of 2023, including the ongoing logistical challenges which have been compounded by the steep decline in thermal coal prices, Exxaro has once again displayed its resilience and agility in navigating through the challenging business environment in which we operate.

Exxaro’s declared a gross interim cash dividend of R11.43 per share comprising the following: 2.5 times adjusted group earnings, and a pass-through of a R1.97 billion dividend from the company’s stake in the Sishen Iron Ore Company.

Exxaro said it remained prudent in its capital allocation framework, in terms of returning cash to shareholders, managing debt, and selectively reinvesting for the growth of the business.

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