Thungela reports strong earnings growth, declares interim dividend

Tungela Resources, a leading coal exporter, has reported a staggering half-year profit that has surged more than 20 times from the previous period. The company attributes this exceptional growth to the soaring coal prices in the market. Despite the impressive profits, Tungela Resources has revised its production guidance for 2022 due to challenges with Transnet, the state-owned rail and port utility. July Ndlovu, the Chief Executive Officer of Tungela Resources, shared insights and highlights from the latest financial results in a recent interview on CNBC Africa. Ndlovu expressed excitement about the value created for shareholders and stakeholders through the exceptional financial performance. The company reported a profit of 9.6 billion and operating free cash flow of 8.9 billion for the interim period. Additionally, Tungela Resources declared an interim dividend of 60 round per share, demonstrating their commitment to returning value to investors, employees, and communities. Despite the positive financial outcome, Ndlovu emphasized the importance of focusing on managing the underlying business efficiently to remain competitive. He highlighted key pillars such as maintaining a fatality-free operation, cost management, productivity enhancement, and environmentally responsible practices. By prioritizing these aspects, Tungela Resources aims to deliver attractive returns to shareholders in the long term. However, Ndlovu acknowledged the challenges posed by Transnet's operational issues, which have impacted the company's production capabilities. Tungela Resources had to revise its production guidance downward from 14-15 million tons to 13-13.6 million tons due to constraints in rail transportation. The CEO mentioned that Tungela Resources is collaborating with Transnet and industry partners to address the logistical challenges and optimize coal shipments. When asked about the company's coal sales destinations, Ndlovu mentioned that their primary customer is their former parent company, providing a stable market with minimal counterparty risk. He noted emerging demand trends in Europe, particularly in the Northwest region, indicating potential opportunities for coal sales in the continent. Ndlovu expressed optimism regarding coal's role in the energy transition, emphasizing its importance in providing the energy required for critical materials production. He welcomed the government's energy plans that recognize coal's contribution to the transition and highlighted the positive market outlook for coal prices in the foreseeable future. Looking ahead, Ndlovu shared his positive outlook on the market conditions, citing long-term investment in the industry, growing demand in emerging markets, and evolving trends in energy security and procurement diversification. He believes that these factors bode well for Tungela Resources and the coal industry as a whole. In conclusion, Tungela Resources' impressive financial performance, strategic focus on operational excellence, and proactive approach to addressing challenges position the company for continued growth and value creation. Despite the external headwinds, Tungela Resources remains resilient and poised to capitalize on market opportunities in the dynamic coal sector.