Sipho Nkosi,
Chief Executive Officer,
Exxaro
 
Johannesburg, South Africa — MININGREVIEW.COM – 15 August 2008 – Diversified, South African-based resources group Exxaro Resources Limited (Exxaro) today reported revenue of R5.8 billion for the six months ended 30 June 2008 – an increase of 19% over the comparative period last year.
 
A news release on the group financial results for the first half of this year issued here said: “A highlight of the reporting period was the R935 million contribution to group operating profit from the coal business, which represents a 138% increase over its contribution in the same period in 2007. This was due to strong demand for product, higher sales volumes and significant price increases,” said Exxaro chief executive officer Sipho Nkosi.

The group’s net operating profit, however, decreased 10% (R85 million) to R806 million, due to lower profits in the base metals business and a significant loss in the mineral sands business.

“The base metals business delivered lower operating profit in line with declining zinc prices, while generally depressed mineral sands prices, lower volumes and a persistently strong Australian dollar had a major adverse effect on the operating results of the mineral sands business,” Nkosi explained. A weaker average exchange rate of R7.54 to the US dollar was realised, compared to R7.33 for the corresponding period in 2007.

The news release went on to reveal that attributable earnings – which included the group’s 20% interest in the after-tax profits of Sishen Iron Ore Company (Pty) Ltd (SIOC) amounting to R735 million – had increased by 48% from R839 million to R1.2 billion, or 363 cents per share.

Headline earnings of R1.3 billion were 54% higher than the R839 million in corresponding period last year, while headline earnings per share increased from 246 cents to 377 cents.

The release added that cash retained from operations of R1.5 billion had been used primarily to fund taxation payments of R216 million, the final dividend for the 2007 financial year of R348 million and capital expenditure of R465 million. Of this amount, R221 million had been invested in new capacity and R244 million had been applied to sustaining and environmental capital.

It added that net cash inflow was R481 million higher at R791 million, compared to the corresponding period in 2007, and had resulted from higher cash generation from operations and a R352 million dividend receipt from SIOC in March 2008.

“Net debt of R483 million at 31 December 2007 has changed into a net cash position of R240 million at 30 June 2008,” the release said.

“Looking ahead, significant increases in labour, fuel and electricity costs will continue to have an adverse effect on the operating results of the businesses under the group’s management,” the Exxaro release pointed out. “Nevertheless, the group should deliver significantly improved earnings in the second half of 2008, mainly due to the favourable coal and iron ore market conditions,” it concluded.