Thungela Resources has warned of a sharp fall in its earnings for the financial year to end-December 2024 as weaker coal prices, logistical constraints and reduced global demand persist.
The JSE- and London-listed coal producer expects headline earnings per share (HEPS) of R24-R26.50, a drop from R34.97 in 2023.
“Headline earnings attributable to the shareholders of the group for the current period is expected to be between R3.2bn and R3.5bn,” it said.
Thungela faced several headwinds in 2024, including a softer price environment for coal, continued underperformance by Transnet Freight Rail (TFR), and milder winter conditions in the northern hemisphere, which reduced demand and led to higher stock levels.
TFR’s rail performance fell to an annualised 47.3-million tonnes for the industry despite industry efforts to improve the situation. These included purchasing critical locomotive spares and bolstering security measures. The company, however, managed to maintain an 18-month fatality-free record and improved its safety metrics across its SA and Australian operations.
Despite the hurdles, in the first half of 2024 Thungela delivered strong operational results, achieving adjusted earnings before interest, tax, depreciation and amortisation of R2bn. Its Australian Ensham mine, acquired in late 2023, outperformed expectations, contributing R419m. SA production remained in line with guidance at 6.2Mt, while Ensham’s success led to an upgraded production outlook.
The company said it is advancing capital expenditure projects at its Elders and Zibulo North Shaft operations, extending the lifespan of its SA assets from eight to about 15 years. Meanwhile, its UAE-based marketing arm is now fully operational, streamlining global coal sales.
In SA, Thungela is working to maximise coal movement through the Richards Bay Coal Terminal while exploring domestic market opportunities. It expects rail performance improvements from 2025, it said.
Meanwhile, as part of its geographic diversification strategy, the company announced on Friday that it had finalised the acquisition of the remaining 15% stake in Ensham for A$48m (R557m) after its 2023 purchase of an initial 85% interest in the mine.
With all regulatory approvals secured, the transaction was effective from Friday, it said.
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