Exxaro returns cash to shareholders with record annual dividend
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JOHANNEBSURG - EXXARO Resources, one of the biggest black empowerment coal and mineral sands mining companies, announced the retirement of chief executive Mxolisi Mgojo and returned cash to shareholders through a record dividend during the year ended December 2020.
Mgojo, who has served Exxaro since its inception in 2006, took the reins from former chief executive Sipho Nkosi in April 2016, but is expected to retire at the end of May 2023.
Exxaro said its managing director for minerals, Nombasa Tsengwa, was chief executive designate, and her appointment would become effective once Mgojo reaches the retirement age of 63.
“Tsengwa’s appointment forms part of a carefully considered succession plan which has taken place over the past two years. The transition period will ensure a smooth and phased handover of duties and responsibilities,” said the group.
Exxaro declared a final dividend of R12.43 a share for the year ended December as it passed through dividends from mainly its investment in Sishen Iron Ore Company year-on-year and benefited from bumper cash generated by operations. Cash generated by operations climbed by 47 percent to R7.7 billion, up from R5.73bn a year earlier.
In addition to the ordinary dividend, Exxaro also returned proceeds of the R5.7bn disposal of additional parts of Tronox, the US-based titanium producer by rewarding shareholders with a R5.43 a share special dividend and the implementation of a R1.5bn share buyback programme.
Other financial and operational highlights included 12 percent revenue growth to R28.92bn from R25.72bn in 2019, mainly due to higher commercial
coal revenue and record coal export volumes.
Exports increased by a record 34 percent despite market disruptions due to Covid-19 and Exxaro achieved four years of zero fatalities.
Commenting on the results, Anchor Capital investment analyst Sehelo Tsatsi said Exxaro was returning significant amounts of cash to shareholders in line with what the company had done over the past few years.
“The last few years have seen several sizeable returns of cash to shareholders,” Tsatsi said.
In terms of operations, the overall coal production volumes, excluding buy-ins, increased by 4 percent year-on year, mainly attributable to higher production at Grootegeluk and the Belfast mine, which was fully ramped-up from March 2020.
The increase was partly offset by lower production at Leeuwpan and Exxaro Coal Central (ECC) due to the Covid-19 lockdown.
Tsengwa said Eskom did not take coal from Leeuwpan and ECC, as the parties were still in the process of concluding new coal supply agreements.
“We had full stockpiles expecting to send coal to Eskom, only to be told we cannot because the contract is not done. That had a knock-on impact on our productivity,” said Tsengwa.
Exxaro said it was working towards completing the disposal of its interest in Leeuwpan and ECC and would update the market in due course.
Exxaro’s share price closed 3.68 percent higher at R183.90 on the JSE yesterday.