Fin24

Exxaro ups profit on higher prices

2012-02-23 08:01

Johannesburg - Diversified miner Exxaro Resources [JSE:EXX] on Thursday reported a 40% rise in full-year profit, boosted by strong demand and higher prices for the majority of its commodities and despite negative currency effects.

Exxaro, South Africa's second-largest coal producer and a major supplier to power utility Eskom, said full-year headline earnings per share rose 40% to R20.98.

“Coal revenue was 21% higher despite the lower volumes at the mines captive to Eskom, combined with lower other domestic sales volumes,” said CEO Sipho Nkosi.

Exxaro said full-year revenue rose by 24% to R21.3bn.

The company said it would pay a final dividend of 500 cents.

The miner said results for this year would continue to be impacted by the trading levels of the rand and the Australian dollar against the US currency, which have been eating into its export earnings.

Exxaro said it would seek alternatives to increase its coal export volumes given bottlenecks and limited capacity on the rail lines leading to the Richards Bay Coal Terminal run by state-owned logistics group Transnet.

“Continued good performance is expected from Transnet Freight Rail and stable Eskom demand is expected in 2012, which will be partially offset by a decrease in export prices and lower coking coal prices,” Nkosi said.

Exxaro, which mines coal, mineral sands and base metals, has a healthy growth pipeline with projects planned across its units and has been scouting Africa and Australia for projects to expand into other commodities, especially iron ore.

Exxaro made a bid worth up to A$338m for African Iron, targeting the Australian-listed company’s Mayoko iron ore project in the Republic of the Congo.

Exxaro is keen to eventually produce 10 million tonnes of the steel-making ingredient a year.

Shares in the company are up 18.7% so far this year, compared with a 6.8% rise in the JSE Top 40 - (Tradeable) [JSE:J200] blue chip index.