Table of Contents
Key Points
- Thungela Resources’ H1 2024 profit dropped 60.53% to $66.36 million, impacted by rail issues and increased operating expenses.
- Revenue grew 16.67% to $937.3 million, driven by higher coal prices and demand, but expenses dampened earnings.
- Assets rose 18.54% to $2.58 billion, with strong cash generation and shareholder returns including a $24.75 million dividend and share buyback.
Thungela Resources, a leading thermal coal exporter led by South African executive July Ndlovu, has reported a substantial decline in earnings for the first half of 2024, with profits slipping below $70 million, as a result of the rail issues that heavily impacted its coal operations.
According to its interim financial statements, Thungela’s first-half profit fell by 60.53 percent, dropping to R1.19 billion ($66.36 million) from R3.01 billion ($168.16 million) in the same period last year. The company cited a surge in operating expenses, exacerbated by ongoing rail constraints in South Africa, as the primary cause of the decline.
Revenue climbs, but expenses dampen earnings
Thungela’s revenue saw a 16.67 percent increase, rising from R14.36 billion ($803.42 million) to R16.75 billion ($937.31 million) during the period. The revenue boost was driven by higher coal prices and increased demand in key markets. This growth was not enough to counterbalance the significant rise in operating expenses, leading to a notable drop in profitability.
CEO July Ndlovu emphasized the company’s commitment to safety and operational excellence in light of the challenging financial results. “Our top priority is ensuring every employee returns home safely every day — a promise we consider unconditional and sacrosanct. We are well-positioned to capitalize on the long-term fundamentals driving global coal demand by focusing on control and maintaining a disciplined capital allocation approach,” Ndlovu stated.
Thungela assets rise, cash generation strong
Since its 2021 demerger from Anglo-American, Thungela has undergone significant expansion under South African executive July Ndlovu’s leadership. The company’s total assets increased by 18.54 percent in the first half of 2024, reaching R46.02 billion ($2.58 billion) by June 30, 2024, up from R38.83 billion ($2.18 billion) at the end of 2023.
Thungela also demonstrated resilient cash generation during this period, delivering total shareholder returns of R441 million ($24.75 million) through an ordinary interim cash dividend of R281 million ($15.77 million) and a share buyback of up to R160 million ($8.98 million). Despite the current challenges, the company remains focused on long-term growth and value creation for its shareholders.
