Exxaro posts 13% rise in annual profit despite drop in coal earnings

Revenue ticked up 1% to 25.7 billion rand during the period.

Exxaro said core equity-accounted income from its stake in Sishen Iron Ore Company (SIOC) increased to 4.423 billion rand ($270.20 million) from 2.605 billion a year earlier, driven by higher iron-ore prices and a weaker exchange rate.

However, coal production volumes fell 3% due to the divestment of its North Block Complex (NBC) operations and lower production at its Grootegeluk operations owing to lower demand from state power utility Eskom for the Medupi power station.

Exxaro, which supplies coal to cash-strapped Eskom, is exposed to the difficulties at the utility including delays in the ramp-up of its Medupi power station.

The miner expanded its Grootegeluk coal mine in Limpopo to meet the expected coal demand from the power station.

Exxaro said it had decided to relinquish its four prospecting rights grouped into two projects, namely Waterberg North and South, following a strategic review decreasing its total attributable coal resources by 22%.

The coal miner said export volumes rose 14% to 9.1 million tonnes during the financial year from a year ago.

The thermal coal seaborne market remained in oversupply while the domestic market remained stable with demand from Eskom varying due to lower offtake from its Medupi power station offset by additional offtake from Leeuwpan and its Exxaro Coal Central operations.

“The competition in our markets is intensifying, with traditional Atlantic Ocean suppliers competing aggressively,” Exxaro said.

The miner declared a final dividend of 566 cents per share compared with 555 cents per share a year earlier.

($1 = 16.3696 rand)

(By Tanisha Heiberg; Editing by Kim Coghill and Shailesh Kuber)