Wescoal to report 500% increase in headline earnings

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Wescoal's vastly improved profitability was driven by the increased contribution from its new, large, Moabsvelden mine.
Wescoal's vastly improved profitability was driven by the increased contribution from its new, large, Moabsvelden mine.
  • Wescoal expects to report an interim increase of as much as 552% in headline earnings per share, and an increase of 677% in earnings per share.
  • The improved profitability was driven by the ramp up at the group's Moabsvelden mine.
  • Wescoal hopes to build on this new momentum and will look to export product in the face of subdued Eskom demand. 

Wescoal expects to report an 552% increase in interim headline earnings per share as operational performance improves.

The junior coal miner on Wednesday said it is finalising its results for the six months ended 30 September 2021 and expects headline earning per share to be between 19.3 and 21.5 cents a share – an increase of between 485% and 552% compared with the 3.3 cents per share for the same period last year.

Earnings per share  will be between 18.3 and 20.2 cents per share, an increase of between 604% and 677%, compared to the 2.6 cents reported previously.

The improved group profitability, Wescoal said, was driven by the increased contribution from its new, large, Moabsvelden mine which offset lower production from its other operations. While still in the box cut construction phase which is edging closer to completion, the project contributed almost 24% of the group’s total run-of-mine production for the half year.

Wesocal was also able to maintain a positive cash generation from operations with earnings before interest, taxes, depreciation and  amortisation (ebitda) expected to be between R400 million and R425 million, compared with R315 million in the comparative period. 

Mining sales volumes relative to the comparable period were 19% higher thanks to a significant increase in sales from its Neosho subsidiary to Eskom’s Kusile power station which consists of a combination of Moabsvelden’s own sales and third-party buy-ins.

The trading business saw sales volumes increase by more than 27% but revenue in this division was just 8% higher because of pricing pressure in the domestic market, Wescoal said.

"The profitability of the group continues to improve driven by steady production from the mining operations, and Wescoal is looking to build on this momentum in the second half of the financial year," the company said in a statement.

"This is despite demand from Eskom still not recovering to pre-Covid levels. The group has also been looking to mitigate against the risk of reducing Eskom coal offtake by taking advantage of opportunities in the export market where prices recently reached historic highs."

Wescoal is expected to release its interim financial on Friday.

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