Coal mining giant Exxaro Resources is expecting its half-year profit to decrease by 37% on its earnings per share and headline earnings per share.
This is because of weak fossil fuel prices for non-renewable energy sources such as coal, natural gas, crude oil, petroleum products and non-renewable wastes, among others.
On Friday, the JSE-listed company advised shareholders that Exxaro and its directors had a reasonable degree of certainty relating to the expected
financial results of the company for the six-month period ended June 30, 2023.
“Headline earnings per share for the six-month period ended 30 June 2023 is expected to decrease between 23% and 37% compared to the six-month period ended 30 June 2022.
“Attributable earnings per share for the six-month period ended 30 June 2022 is also expected to decrease between 23% and 37% compared to the six-month period ended 30 June 2022,” said Exarro.
Another challenge that could have contributed to the drop in profit for the company is the lack of freight rail logistics as Transnet struggles to provide capacity in terms of locomotives due to rail network inefficiency.
Another crisis causing difficulty is the lack of locomotive support on the rail system to help coal miners deliver productive services through rail transportation.
Cable theft and vandalism on rail corridors add to challenges of bottom line – a factor that leads to mining companies and other logistics businesses to rely on road freights to deliver goods, which is a costly exercise.
“The decrease in earnings at our own managed operations is largely attributable to lower coal sales prices and volumes, compounded by the impact of ongoing logistical challenges.
“Income from our equity-accounted investments at Sishen Iron Ore Company Proprietary Limited and Mafube Coal were also negatively impacted by lower prices,” the company said.
Earnings before interest, taxes, depreciation and amortisation for the interim period, are also expected to be between 22% and 36% lower year-on-year, the company said.
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