The board of Exxaro, SA’s largest coal miner has decided to reward shareholders with a R5.4bn windfall, owing to its “robust” balance sheet. The payout comprises a final dividend of R10.10 per share as well as a special dividend of R5.72.
CEO Nombasa Tsengwa said on Thursday Exxaro was able to maintain stakeholder returns, a robust balance sheet and strong cash flows despite the challenging environment of low coal prices and logistics challenges.
Exxaro paid an interim dividend of R11.43 per share, amounting to about R2.8bn. This brings total dividend payments for the year to R27.25 per share, slightly down against total payments of R27,29 in 2022.
The group said in its financial results for the 12 months to end-December that the special dividend was still subject to approval by the Reserve Bank, and a further announcement would be released once that approval had been obtained.
The special dividend related to an improvement in its net cash position to R14.8bn (excluding net debt from its energy business) from R9.6bn in the previous year. Lower export prices for coal and a decline in domestic and export sales saw profit for the year fall 22%. Headline earnings per share, a profit measure commonly used in SA, decreased from R60.16 in 2022 to R46.81.
Earnings before interest, tax, depreciation and amortisation (ebitda) were down 29% to R13.4bn; however, according to Exxaro, this was still its second-highest ebitda performance.
Group revenue for the year declined 17% to R38.4bn as a result of a decrease in coal export sales prices. The average benchmark price was down 55% to $121 per tonne, compared to $271 per tonne in 2022. This was partially offset by a weaker exchange rate and higher prices achieved on domestic sales, the company said.
Coal production volumes from operated mines (excluding third-party buy-ins) decreased 2% to 42.5-million tonnes. Sales volumes decreased 4% to 40.5-million tonnes, mainly as a result of lower Eskom demand, partly offset by higher domestic sales due to export coal being diverted to the local market.
Coal export volumes decreased slightly from 5,2-million tonnes to 5,1-million tonnes. Tsengwa said that problems such as limited locomotive availability, security incidents and vandalism, and maintenance backlogs on the Transnet Freight Rail (TFR) coal line resulted in its lowest volume exports through the Richards Bay Coal Terminal since 1992.
RBCT exported 47,2-million tonnes in 2023, down from a 76-million tonne peak in 2017.
Exxaro chief coal operations officer Kgabi Masia believed that after the appointment earlier this year of new executives at Transnet who will drive implementation of the state-owned logistics company’s turnaround plan, TFR’s performance would probably not deteriorate further this year. In the meantime, Exxaro was focusing on improving efficiencies for the transport of coal via trucks even though this is a much more expensive option to exporting via rail.
“We continue trucking where it makes sense for us. Trucking costs us about three to four times more than railing coal, hence it is important that we focus on efficiency,” Masia said.
In 2023 about 10% or 500,000 tonnes of total coal was exported to other ports.
“It is important strategically that we enable ourselves beyond the RBCT/TFR corridor to still run a business and export coal. This includes developing value accretive export channels. A (coal export) price range of $80 to $100 per tonne is probably a space where we will continue to make use of trucking because the impact on our business of not exporting from a volume perspective can be severe,” group manager of marketing and logistics Sakkie Swanepoel said.
The group hopes to increase coal export sales to within a range of 5.7-million to 6.3-million tonnes in 2024.
Its Cennergi wind power business performed well due to improved wind conditions, generating 727GWh, an increase of 18% compared to 2022. As a result, revenue for its energy business improved by 16%, Exxaro said.
In early afternoon trade the share was up 3% on the JSE, trading at R179.30.
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