/ 18 August 2011

Exxaro first-half profit up 53%

Diversified miner Exxaro on Thursday reported a 53% rise in first-half profit, boosted by higher sales and prices at its coal business.

Exxaro, South Africa’s second-largest coal producer and a major supplier to power utility Eskom, said headline earnings per share (EPS) for the six months to the end of June rose to 1 045 cents compared with 683 cents the previous year.

“The coal and mineral sands business were the main contributors to the increase,” said Sipho Nkosi, Exxaro’s chief executive officer.

Headline EPS are the main profit gauge in South Africa and strip out certain one-time items.

The earnings exclude an impairment charge of R439-million for its Zincor refinery, which the company plans to close. Exxaro has said it plans to exit the zinc business and focus on growing other, more lucrative, parts of its operations, especially coal and iron ore.

Mineral sands
The company said the outlook for both coal and mineral sands remained strong.

“The positive market recovery for coal in terms of price and demand are set to continue in the second half of 2011,” it said, but added that constraints on the rail line leading to the export terminal remained.

“Market conditions on the mineral sands business are favourable and the demand for all products is strong.”

First-half revenue rose 22% to R9.6-billion.

The company declared an interim dividend of 300 cents.

Shares in Exxaro are up nearly 30% so far this year, compared with a 6.6% fall in Johannesburg’s Top-40 index of blue chips. — Reuters