Thungela Resources (TGA) H1 2024 earnings summary

Executive summary

• Achieved 18 months of fatality-free operations, with South Africa recording its lowest TRCFR at 0.99 and significant safety improvements in Australia; Group TRCFR improved to 1.75 from 2.53 year-over-year.

• Export saleable production rose to 7.8 million tons, up from 6.1 million tons year-over-year, driven by robust performance at Ensham.

• Net profit declined to ZAR 1.2 billion from ZAR 3.0 billion year-over-year, reflecting weaker coal prices, higher costs, and rail constraints.

• Adjusted EBITDA was ZAR 2.1 billion, down from ZAR 4.4 billion year-over-year, with Ensham contributing ZAR 1 billion.

• Interim dividend of ZAR 2.00 per share and share buyback of up to ZAR 160 million declared, totaling 47% of adjusted operating free cash flow returned to shareholders.

Financial highlights

• Revenue: ZAR 16.8 billion (up 17% year-over-year); Net profit: ZAR 1.2 billion (down from ZAR 3.0 billion); Adjusted EBITDA: ZAR 2.1 billion (down from ZAR 4.4 billion).

• Earnings per share: ZAR 9.52 (down from ZAR 22.45 year-over-year); Headline EPS: ZAR 9.52.

• Net cash: ZAR 6.7 billion at 30 June 2024 (down from ZAR 10.2 billion at 31 December 2023).

• Adjusted operating free cash flow: ZAR 936 million (down from ZAR 4.3 billion year-over-year).

• Capital expenditure: ZAR 1.5 billion, with ZAR 742 million sustaining and ZAR 799 million expansionary.

Outlook and guidance

• 2024 export saleable production guidance for South Africa unchanged at 11.5–12.5Mt; Ensham revised up to 3.5–3.8Mt (100% basis).

• South Africa FOB cost per export tonne guided at ZAR 1,180–1,300; Ensham at ZAR 1,830–1,950.

• Sustaining and expansionary capital guidance maintained; no expansionary capital for Ensham.

• Anticipate improved TFR rail performance from 2025, with early signs of recovery in H2 2024.