- Record coal export volumes and higher sales to Eskom helped boost the group's revenue.
- Export sales volumes increased from 4.3 million tonnes to 5.9 million tonnes in the six months to end June.
- The company has forecast a challenging second half of the year due to Covid-19 headwinds.
Record coal export volumes and higher sales to power utility Eskom helped boost Exxaro's [JSE:EXX] revenue by 18% in the first quarter of 2020, as the company navigated the nationwide lockdown impacted mining companies across the country.
In its financial statements for the six months to end June released on Thursday, the diversified black empowered company said coal export sales soared by 39%. This, it attributed to more coal being mined from its Belfast, Exxaro Coal Central operations and Grootegeluk mines.
The company, which is one of the major suppliers to Eskom and operates mines in Mpumalanga and Limpopo, said earnings before interest, taxes, depreciation, and amortization (EBITDA) were 40% up to R3.9 billion. Core headline earnings per share ticked up 11% to R13.39.
"Consolidated group revenue was up 18%, mainly due to a 15% increase in coal revenue and the addition of clean energy revenue relating to Cennergi, contributing 100% from 1 April 2020," said CEO Mxolisi Mgojo in a statement.
"The coal revenue increase is attributable to higher volumes to Eskom as well as record export volumes."
According to the company, thermal coal production at Grootegeluk was up 6% due to increased offtake from Eskom for the Medupi power station. Thermal coal production from the group's Mpumalanga mines was up 4% to 230 kt, buoyed by higher production at Belfast.
Export sales volumes increased from 4.3 million tonnes to 5.9 million tonnes at an average export price of $52 per tonne, against $54 per tonne in 2019. Apart from higher commercial coal revenue, the company also benefited from a weaker exchange rate during the reporting period, unlocking a cash flow of R4.7 billion from operations, up from R3.2 billion in the previous corresponding period.
Despite delivering positive results, Mgojo did not discount the challenges that lie ahead for the sector as a result of the impact of Covid-19. He forecast that the outlook for the second half would be challenging.
The effect of the pandemic also contributed to a significant drop in the company's capital expenditure, which dipped by 53% compared to the first quarter of 2019, due to project delays and the effects of the lockdown.
The company said the disposal of its 26% stake in Black Mountain Mining, a zinc mine in the Northern Cape was "imminent", while the sale of its interest in Exxaro Coal Central operations and the Leeuwpan mine in Mpumalanga, which recorded lower production volumes was progressing according to schedule.