Johannesburg - Exxaro Resources sees a “challenging” year ahead after reporting a return to profit in 2015 on higher coal production and sales, even as minerals prices plummeted.
Net income for the 12 months through December was R296 million ($19 million) compared to a net loss of R883 million in the previous year when it took a R5.76 billion write down on its Mayoko iron-ore project in the Republic of Congo.
Headline earnings, which exclude one-time items, fell 67 percent to R4.57 a share from R13.72, the company said on Thursday in a statement. Revenue rose 11.8 percent to R18.3 billion.
The company declared a final dividend of 85 cents a share, 60 percent lower than a year ago.
Coal revenue rose 12 percent from the previous year, “mainly from commercial mines, reflecting a combination of higher export sales volumes at weaker rand international prices, higher Medupi power station coal sales and lower domestic steam volumes at lower prices,” Exxaro said. Coal prices fell 21 percent along with other minerals during the year.
“We anticipate that 2016 will be challenging” due to expected slowing economic growth in South Africa and as coal prices remain at current levels in the short term, the company said. “There is, however, still good international demand for Exxaro’s coal.”
The company said it will save future labor costs of R250 million a year after 464 employees took voluntary severance packages at a cost of R408 million in 2015.
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