Poor rail performance and a reversal of record coal prices seen in 2022 and early 2023 continued to weigh on Thungela’s financial performance in the first half of 2024.
With headline earnings per share (HEPS) down about 58% to R9.52 for the six months ended June due to a softening of coal prices, the coal miner has slashed its interim dividend by 80% and will pay out R2 per share, compared with R10 in the previous comparative period.
The company has, however, announced a share buyback programme to the value of R160m which is expected to be implemented during the second half of the year.
“The single biggest impact on our results is softer prices,” said Thungela CEO July Ndlovu.
“The milder winter conditions in the northern hemisphere led to reduced demand and higher gas and coal stock levels, which contributed to softer benchmark coal prices experienced in the first half of the year,” he said.
The Richards Bay benchmark coal price averaged $101 per tonne for the period under review compared with about $120 in 2023 and $270 in 2022.
In Australia, the Newcastle Benchmark coal price softened to an average of $130 per tonne for the period — 25% lower than in 2023.
Export saleable production for the first half relating to its SA operations was 6.2-million tonnes, which was slightly up from last year and in line with the full-year guidance range of 11.5-million to 12.5-million tonnes.
In Australia, Ensham recorded strong production results for the period, with export saleable production of 1.6-million tonnes (on an 85% basis), or 1.9-million tonnes (on a 100% basis). Following the strong performance at Ensham in the first half of the year, the group has upgraded production guidance for the full-year 2024 from between 3.2-million tonnes and 3.5-million tonnes (on a 100% basis) to between 3.5-million tonnes and 3.8-million tonnes.
Ndlovu said Transnet Freight Rail’s (TFR) performance during the first half of the year in railing coal to the Richards Bay Coal Terminal (RBCT) was disappointing at 47.3-million tonnes on an annualised basis for the industry, compared with the 47.9-million tonnes railed in 2023.
The decline in performance was mainly the result of two major derailments on the North Corridor line in January and May.
Thungela was only able to rail 5.8-million tonnes to the RBCT in the first half of 2024, compared with 6.2-million tonnes railed in the comparative period. Given the poor rail performance in the first half of the year, the group realised equity export sales from its SA operations of 6-million tonnes, compared with 6.3-million tonnes in the first half of 2023.
But, said Ndlovu, the new management team at Transnet was implementing the right “building blocks”.
“We only expect to see improved rail performance from 2025,” he said.
RBCT exported 47.9-million tonnes in 2023, down from a 76-million tonne peak in 2017. It has set a target of increasing exports to 50-million tonnes this year.
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