Empowered diversified miner Exxaro Resources achieved a robust financial performance for the year ended December 31, 2018.
The company reported record coal production, sales and exports, while its revenue increased by 12% year-on-year to R25.5-billion. Its earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by R4.5-billion year-on-year to R7-billion.
Headline earnings per share rose to R26.72, from R5.02 in 2017.
The company declared a final cash dividend of R5.55 per share, and a total dividend of R10.85 per share – a 55% year-on-year increase.
Last week, CEO Mxolisi Mgojo said the company’s earnings growth was the result of one-off costs in the prior year, such as the black economic empowerment transaction costs that were fully expensed in 2017.
However, he added: “Even at an adjusted level, core Ebitda grew to R7.3-billion from R7.2-billion.”
The R7-billion Ebitda was sufficient to cover the R1.9-billion increase in capital expenditure (capex), which Mgojo attributed to advancing the Grootegeluk 6 project to Phase 2 and projects at the Belfast mine, which were ahead of schedule and would deliver first coal in first half of this year.
The group’s net debt of R3.9-billion at year-end translated into a net-debt-to-Ebitda cover of 1, which was well within Exxaro’s internal targets.
Mgojo said the R69-million cash-positive position at the previous year-end was an anomaly, given the number of transactions in the year that resulted in one-off proceeds, adding that the net debt position as at December 31 was a more realistic marker.
Meanwhile, Exxaro’s all-time-high coal production volumes, sales and exports were supported by positive factors, such as increased supply to Eskom, mainly for the Medupi power station, and strong export demand, Mgojo said.
To further optimise its portfolio, Exxaro successfully sold its noncore Manyeka mine to Universal Coal for R90-million, with the disposal realising R69-million. Further, the disposal of NBC, concluded in October 2018, resulted in a gain of R102-million.
Mgojo commented that the recently announced transaction with Wescoal for the disposal of Arnot was “a landmark for the country, with former employees being empowered for the very first time with 50% ownership participation”.