Diversified resources group Exxaro Resources expects full-year earnings to be as much as 44% lower due to cost pressures.
“While revenue is expected to improve compared to the previous year, this has been offset by cost pressures,” the group said in a statement on Friday.
It cited inflation, higher selling and distribution costs due to the use of alternate distribution channels and increased operational and maintenance costs, primarily driven by higher volumes of overburden as the main issues affecting earnings.
Headline earnings per share (HEPS) for the year to end-December is expected to decrease 30%-44% to R26.21-R32.76 compared with the previous year.
Earnings before interest, tax, depreciation and amortisation (ebitda) are expected to be 16%-30% lower at R9.379bn-R11.255bn.
Exxaro said it expected a stable contribution from its energy business, supported by consistent wind conditions. However, the financial performance of its equity-accounted investments was expected to decline compared with the prior year, particularly in Sishen Iron Ore Company, due to lower iron ore prices and sales volumes, and in Mafube due to lower export prices.
The group, which is valued at R52.7bn on the JSE, expects to release its earnings on March 13. Its shares closed down 3.7% on Friday at R150.98
The company has been in the news recently after the acrimonious departure of its CEO Nombasa Tsengwa.
Business Day reported in February that Tsengwa mounted a vigorous defence after facing allegations of misconduct and she raised questions against new conflict-of-interest queries as she broke ties with Exxaro Resources after more than two decades of services, including three years at the helm.
Tsengwa, suspended in December over alleged workplace and governance issues, had approached the high court in Pretoria on an urgent basis, arguing her suspension was illegal and asking it to hear her claims that the board of Exxaro overstepped its powers by suspending her without a disciplinary hearing.
In her resignation letter, obtained by Business Day, Tsengwa defended herself against claims of misconduct and fostering a toxic culture. She also raised questions about the shift from the initial accusations to new, specific allegations of a conflict of interest. /With Tiisetso Motsoeneng
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