EXXARO Resources expects first-half earnings to fall by as much as 23% after lower contributions from its investments in Sishen Iron Ore Company (SIOC) and Black Mountain Mining (BMM).
The coal producer said in a trading update on Friday that headline earnings per share (HEPS) for the six months ended June would fall between 18% and 23% from 1,724c in the corresponding period in 2025.
This puts HEPS at between 1,327c and 1,414c. Attributable earnings per share (AEPS) are also expected to decline by between 18% and 23%, to a range of 1,322c to 1,408c.
Exxaro attributed the decline mainly to lower income from its equity-accounted investments in SIOC and BMM.
SIOC, in which Exxaro holds a 21% stake, was negatively affected by the strengthening of the rand against the dollar and above-inflation increases in key mining input costs compared with the prior period, largely reflecting the effects of the conflict in the Middle East.
BMM’s contribution fell because of higher production costs and a delayed ramp-up of the Gamsberg project. Exxaro holds a 24.4% stake in BMM, which operates the Gamsberg zinc mine.
Exxaro’s trading statement comes against weaker mining production numbers for both coal and iron ore.
According to Statistics South Africa’s latest data, coal production in the country fell 6.6% year-on-year in June, while iron ore output dropped 10.2%.
The two commodities contributed 1.7 and 1.5 percentage points respectively to the overall 4% decline in mining production.
Iron ore production also fell 2% in the second quarter compared with the first. Iron ore sales at current prices were 16.1% lower year-on-year in June, making it one of only two negative contributors to overall mineral sales, which increased 27.2%.
Coal prices, however, have provided some support for Exxaro.
Export thermal coal prices increased to as much as $124/t during the first half – a 35% lift, partly due to the Middle East conflict.
In June, Exxaro forecast an average export price of $105/t ex-South Africa for the period, up from $92/t a year earlier.
The API4 benchmark has since eased from those highs and was trading at about $111/t on Friday, 14 August. .
Exxaro said in June that first-half coal exports increased 15% to 3.94Mt. This boosted total group sales 6% to 20.2Mt, despite ongoing logistics difficulties.
The company forecast full-year export sales of between 7.3Mt and 8Mt, with total coal sales expected at between 39.4Mt and 42.8Mt.
Despite the expected earnings decline, Exxaro said EBITDA would be broadly in line with the previous corresponding period.
