Johannesburg, South Africa — MININGREVIEW.COM — 25 February 2009 – Diversified South African-based resources group Exxaro Resources Limited (Exxaro) reports significant increases in consolidated revenue and net operating profit for the 12 months ended 31 December 2008.
In its audited group financial results for the year issued here, the company revealed that its consolidated revenue for the period under review had amounted to R13.8 billion– an increase of 36% compared to the 2007 calendar year. Net operating profit had risen 71% to R2.5 billion.
Exxaro – the biggest black-owned diversified mining company in South Africa – is the country’s biggest coal supplier to state utility Eskom.
“The coal business reported record revenue and net operating profit as strong demand resulted in increased sales at higher prices, despite a significant softening in international prices in the last quarter of 2008 following the global economic meltdown,” said Exxaro chief executive director, Sipho Nkosi.
“The sands business reported a higher consolidated net operating profit compared to 2007 as a profit contribution from KZN Sands and a substantially higher profit from Namakwa Sands more than offset a loss in the Australian operation,” he added. “Significantly lower average zinc prices and an increased environmental provision resulted in the base metals business recording a net operating loss,” he continued.
Looking ahead, the group is expected to continue experiencing strong demand for local power station coal in 2009. However, coking coal sales are anticipated to be lower at reduced prices. Steam coal sales volumes should increase, but at lower international prices.
Increased production volumes at all mineral sands operations and a full 12-months’ contribution from Namakwa Sands, together with the local and Australian currencies remaining at their present weaker levels, should benefit this business in 2009 if market demand and prices remain at current stable levels.
The results statement added that base metals business was expected to remain under pressure in 2009 as a result of continued depressed market conditions and zinc prices.
“The group will have a strong focus on capital prioritisation and working capital management, together with continuous business improvement initiatives and cost control to offset lower demand and price challenges,” it added.
“Overall, the group’s consolidated results for 2009 will be driven largely by the extent to which global recessionary conditions impact on demand and prices for its commodities, as well as the trading levels of the local and Australian currencies,” the statement continued..
“The uncertain market outlook remains a key factor to the group’s results for 2009.”