Exxaro CEO Mxolisi Mgojo. Picture: BLOOMBERG/ WALDO SWIEGERS
Exxaro CEO Mxolisi Mgojo. Picture: BLOOMBERG/ WALDO SWIEGERS

Exxaro Resources, which supplies coal to Eskom, says it will pay shareholders a special dividend of 897c a share after half-year net profit doubled thanks to asset sales.

The company said on Thursday profit in the six months to end-June rose to R6.4bn, from R3.2bn previously, after it sold its 26% membership interest in Tronox UK and part of its investment in Tronox Holdings.

But net operating profit, which excludes those gains, fell to R2.4bn from R3.1bn a year before. Revenue edged 2% lower to R12bn.

Exxaro, which is headed by CEO Mxolisi Mgojo, declared a gross interim cash dividend of 864c a share and a special dividend of 897c a share.

The company said while coal export volumes increased 9%, selling prices fell sharply.

“On the domestic front, lower than contracted volumes were taken by Eskom for the Medupi power station, however commercially there was no impact on revenue,” it said. 

Operating earnings were dented by lower revenue, higher distribution costs “and higher rehabilitation costs resulting from revised cost estimates”.

The group said rising geopolitical risks and “aggressive trade policies” would weigh on global economic activity in the second half of the year.

“In terms of the global coal market, we do not see a recovery from the current pricing and demand balance.”

Meanwhile, it said tepid growth in SA had raised the risk of a sovereign rating downgrade towards the end of 2019, and the rand-dollar exchange rate was expected to remain volatile.

“We welcome government’s commitments in the short term towards Eskom; however, much more structural and sustainable reforms are required to inject the confidence required that will build the economy and create the employment opportunities so desperately required,” Exxaro said.

hedleyn@businesslive.co.za