EXXARO Resources declared a R10 per share (R3.4bn) final dividend today following robust headline profits for the year ended December.
The payout, 15% higher than last year, was in terms of the group’s improved dividend distribution policy in which dividend cover ratio was increased. An interim dividend of R2.9bn was paid last year, equal to R8.43 per share for a total dividend of R6.3bn.
“This is a little thank you to shareholders,” said Exxaro CEO Ben Magara in an interview on Thursday of the final dividend declaration. It comes as Exxaro no longer needs a R12bn to R15bn cash buffer for strategic diversification having completed the acquisition of manganese assets in the Northern Cape from Ntsimbintle Holdings in February.
The company had net cash of R17.6bn as of December 31 prior to funding renewable energy division Cennergi’s R6.9bn accquisition and the R10.6bn manganese acquisition. Exxaro has R13bn in bank facilities.
Exxaro posted an 8% increase in headline earnings of R32.47 per share for the 12 months amid subdued thermal coal prices. On an attributable basis, earnings fell 14 cents per share to R31.78.
The main driver of the 2025 performance was Exxaro’s coal division which supplies Eskom on a cost plus basis, and exports a portion of output. It reported unchanged Ebitda of R10.3bn for the 12 months.
This was despite Exxaro’s achieving an average export price of $86/t against an API benchmark of $90/t for the year – itself well down on last year’s $105/t average. Today, however, the coal price has increased to $110/t as the world’s energy market absorbs the shock of the US/Israel attack on Iran.
Magara, who said futures prices were touching $120 to $125/t, indicated the company would sell more coal into the higher price environment, catalysed by an improved performance by Transnet on the Mpumalanga and Richards Bay coal line. “We are increasing export production between eight and 10% as per our guidance,” he said. Exxaro has guided to exports of 7.3 to eight million tons from 7.1 million tons last year.
Total coal production is guided to 39.4 to 42.8Mt. Coal sales have been guided to 39.4Mt to 42.8Mt for the current financial year.
Commenting on the business outlook Magara said the longer the Iran crisis continued the “demand would be higher for longer. Whether people use oil or LNG [liquified natural gas] – and because of the tightness in the LNG and oil sector, coal becomes an alternative. So we are seeing coal prices moving,” he said.
Every $1 increase in the coal price translates to an additional R127m in Ebitda for Exxaro, offset by a R16m cost for every 1% increase in the fuel price.
