Exxaro final results December 2018

Revenue for the year increased to R25.5 billion (2017: R22.8 billion), operating profit rose to R5.7 billion (2017: R5.2 billion), profit for the year from continuing operations grew to R7 billion (2017: R2.8 billion), while headline earnings per share from continuing operations increased to 2 645 cents per share (2017: 682 cents per share).

Final dividend
Notice is given that a gross final cash dividend, number 32 of 555 cents per share, for the financial year ended 31 December 2018 was declared, payable to shareholders of ordinary shares.

Company outlook
Exxaro expect sustainable improvement in the physical operating results for the coal business by embedding our business optimisation and operational excellence initiatives across all operations, and unlocking value through data analytics and value-chain integration. We are proud to report that we are on track and within budget to deliver value on our coal capital projects, spending more that R20 billion over the next five years to increase sales volumes from 45Mtpa in FY18 to more that 60Mtpa by FY23. The Belfast and Leeuwpan Lifex projects are ahead of schedule, while the GG6 expansion and Grootgeluk rapid loan out station projects are impacted by community and labour related activities in the Lephalale area. We continue to engage with contractors faced with labour unrest and corporate uncertainty.

A stable domestic market is anticipated for 1H19, supported by healthy prices due to tight supply in premium quality sized coal. In Mpumalanga Eskom has, due to the termination of several coal supply agreements, requested industry participants for expressions of interest to supply coal on a short-term basis while it is looking to enter into longer-term contracts. This is positive for Exxaro as it provides more flexibility between various markets.

We remain positive that the outcome of the national elections on 8 May 2019 will put South Africa on a renewed investment and economic growth path urgently needed to address the socioeconomic challenges the country is facing. Exxaro is fully supportive of the investment drive spearheaded by the Presidency. The international market remains largely bearish owing to possible market oversupply, which hinges on China and its ban on coal imports. An increase in coal demand is expected in India, a market that is likely to remain our main export destination.

Market conditions are expected to be supportive in 2019. We remain confident that through our well-diversified coal portfolio, we will continue to explore more opportunities in emerging markets where coal-fired power plants are being commissioned. In 1H19, the performance of our SIOC investment will be boosted by higher iron ore prices after supply disruptions in Brazil, a relative high global lump premium and a weak rand/US dollar exchange rate. Although global economic activity is edging down and market sentiment is challenging, commodity price support in 2H18 is expected to continue into 1H19. However, global policy tensions, especially on trade, remain the biggest threat to global growth. The rand/US dollar exchange rate is expected to remain volatile during the period.

2019-03-14 08:39:48