Exxaro H1 profit falls 20% as SIOC income weakens

Exxaro reported H1 revenue of ZAR 5.6 billion, up 7%, while headline EPS fell 20% to ZAR 13.77 on weaker equity-accounted income.

"We are building a diversified natural resources champion," Chief Executive Ben Magara said, citing coal, renewable energy and manganese as the three pillars of the company's future.

Coal production rose 11% to 21.5 million tons and export sales climbed 15% to 3.9 million tons, while the Lephalale Solar Project reached full commercial operation in April. The earnings decline reflected a ZAR 781 million drop in SIOC contributions and weaker results from Black Mountain Mining, partially offset by a first-time ZAR 242 million contribution from the Tshipi Borwa manganese investment.

The board declared an interim dividend of ZAR 7 per share, Exxaro's 47th consecutive since listing. Shares fell 1.11% to $18,790 as investors weighed the earnings drop against cash generation of ZAR 6.1 billion and a net cash position of ZAR 6.4 billion.

EBITDA was broadly flat year on year at ZAR 5.6 billion but rose 22% from the second half of 2025. The stronger rand cut ZAR 740 million from group EBITDA, while diesel costs rose 25 percent at the company's mines. Export price realization slipped to 91 percent of the API4 benchmark from 96 percent, though realized export prices improved to $96 per ton.

The company reiterated full-year coal production and sales guidance, with export sales on track to reach 8 million tons for 2026. It trimmed renewable energy generation guidance to 800-830 gigawatt hours from 830-860, citing weaker wind conditions in the Eastern Cape, and introduced first-time manganese guidance of 3.2-3.4 million tons on a sales basis.

Tshipi Borwa, in which Exxaro acquired a 50 percent stake in February, produced 11 percent more manganese year on year, with CIF prices for high-grade semi-carbonate rising 18 percent to $4.64 per DMTU. Finance Director Riaan Koppeschaar said the company aims to keep net debt to EBITDA below 1.5 times, excluding project finance debt, and will fund future growth through internally generated cash flow. The Karreebosch Wind Farm remains on schedule for commercial operation in the first half of 2027.

The results show coal still drives earnings, with energy and metals expected to account for more than half of group earnings by 2030. Investors will watch rail performance from the Waterberg region, which management said remains the key lever for unlocking additional export volumes.

This article is for informational purposes only and does not constitute investment advice.