Thungela 2023 profit crashes on weak coal prices, rail woes

(Alliance News) - Thungela Resources Ltd reported on Monday its profit in 2023 nosedived as it battled against depressed coal prices and persistent rail constraints in South Africa.

The Rosebank-based coal miner said its pretax profit tumbled 70% to ZAR7.20 billion, about GBP301.1 million, in 2023 from ZAR24.14 billion in 2022, while net profit dived 73% to ZAR4.97 billion from ZAR18.21 billion.

Annual operating costs rose 5.9% to ZAR23.74 billion from ZAR22.42 billion.

Against the backdrop of significant decline in coal prices and continued poor performance from Transnet Freight Rail, revenue slumped 40% to ZAR30.63 billion from ZAR50.75 billion.

Export saleable production in South Africa declined 6.9% to 12.2 million tonnes from 13.1 million tonnes. In Australia, export saleable output was 900,000 tonnes. Thungela acquired the Ensham Mine in Australia last year.

The Richards Bay Benchmark coal price dropped 13% on average to USD112.49 per tonne in the second half of the year, compared to USD129.50 per tonne in the first half of the year.

In January 2023, Newcastle Benchmark coal price peaked at USD357.75 per tonne, and the first half of the year averaged USD204.27 per tonne, compared to USD141.31 per tonne in the second half of the year.

Thungela slashed its final dividend to ZAR10.00 from ZAR40, with the total payout plunging to ZAR20.00 from ZAR100.00.

The cola miner said it will start share buyback programme of up to ZAR500 million. It expects this repurchase plan to to start from Tuesday and to June 3.

For 2023, earnings per share plummeted to ZAR37.66 from ZAR127.08, while headline EPS slumped to ZAR34.97 from ZAR130.82.

For 2024, Thungela guides for export saleable production of between 11.5 million tonnes and 12.5 million tonnes, based on the expected rail performance.

"We continue to make good progress on our production replacement and life extension projects in South Africa, Elders and Zibulo North Shaft," Thungela said.

But its shares rose 7.8% to 478.40 pence early Monday in London. They were up 3.5% to ZAR111.68 in Johannesburg.

By Artwell Dlamini, Alliance News reporter

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