Exxaro expects jump in earnings despite lower coal export prices


Mining company Exxaro expects its headline earnings to improve between 5% and 19% - however, earnings before interest, taxation, depreciation and amortisation is projected to decline due to lower export prices for coal, among other things.

The coal producer on Thursday issued a trading statement for the year ended 31 December, 2019.

"Headline earnings per share (HEPS) for the year ended 31 December 2019 is expected to increase between 5% and 19%, while attributable earnings per share (AEPS) for the year ended 31 December 2019 is expected to increase between 32% and 46% compared to the year ended 31 December 2018," the statement read.

Headline earnings per share amounted to R26.72 cents. Exxaro projects HEPS to be between R28.05 and R31.80 for the 2019 financial year.

The higher earnings are attributed to an increased contribution from equity-accounted investments – which has offset lower ebitda, expected to decrease between 22% and 8%. Ebitda in 2018 ticked in a R6.9 billion. It is expected to be between R5.4 billion and R6.4 billion for the 2019 financial year.

The group said coal export volumes were higher than the previous year, but there was a "significant decline" in export prices.

"Although we received higher prices in the domestic markets for our products the impact was offset by lower offtake at the Medupi power station, Matla as well as the sale of our NBC mine in October 2018.

"These lower volumes were somewhat offset by higher production at our other Mpumalanga mines," the group said.

During the period, the Exxaro incurred higher operating costs as it offered voluntary severance packages. Other factors which impacted operating costs include "the higher cost of overburden removal, rehabilitation provisioning as well as distribution cost in line with our higher export volumes," Exxaro said.

Exxaro will release its financial results on 12 March, 2020.

Its share price, which opened at R121 on Thursday, was trading 2.55% weaker at R115.09 by 14:55.

Compiled by Lameez Omarjee

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