Johannesburg - Mining company Exxaro [JSE:EXX] tripled its interim dividends from 90c to R3 despite South Africa's challenging mining environment, the company said on Thursday as it released its results for the six months to end-June.
Net operating profit was up 4% and interim revenue grew by 10% to R10.7bn.
The coal business side of Exxaro delivered a sturdy performance, boosting the miner’s results.
“I’m very proud to report operating margins above 20% in the coal ,” Exxaro finance director Riaan Koppeschaar said at the results presentation.
CEO Mxolisi Mgojo admitted that the last six month had been a difficult period to operate in, with volatility in the market and low economic growth prospects haunting miners. Despite this, Exxaro's aftertax profit more than doubled to R2.7bn from R1.3bn.
It achieved a net operating profit of R2.9bn, up 35% from the last period’s R2.1m. This was mainly driven by increased revenue coupled with a rise of only 1% in operating expenses, Exxaro said.
Mgojo said Exxaro’s positive performance was mainly due to solid results from the coal business as well as higher international commodity prices.
Eskom’s Medupi power plant coming online also helped Exxaro numbers, with the Grootgeluk mine's increased volumes helping to boost its profit.
Nombasa Tsengwa, executive head of coal at Exxaro, pointed out that good coal export prices helped boost Exxaro’s coal business.
The average price per tonne achieved on exports was $65, as opposed to the previous period’s $42. This was offset by the strengthening of the rand to an average of R13.20 to the dollar recorded for the current period ended June 30, as well as lower export and domestic volumes.
Exxaro said it has a positive outlook for the coal business for the rest of the year, taking into consideration the stable trading conditions in the domestic market as well as stable international coal prices.
But it said it expected sales of metallurgical coal to ArcelorMittal to fall in the second half of the financial year.
"Export markets are still reliant on demand from India for lower-quality coal. However, Exxaro is actively diversifying its markets for lower-quality coal in order not be overly dependent on the Indian market," Exxaro stated.
Exxaro shares were down 0.75% at R107.98 on the JSE at around 11:15.
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