Exxaro FY HEPS down 36%

South African mining group Exxaro has made significant changes within its leadership structure as it aims to recover from a challenging year in 2024. The company has appointed industry veteran Ben Magara as its new CEO, following the recent boardroom fallout with the former CEO. Magara, who will assume office on the 1st of April, brings a wealth of experience from the mining industry, particularly in coal, and is familiar with Exxaro as he has previously served on the company's board. The appointment of Ben Magara comes amidst Exxaro's announcement of a 36% slump in profits for the year ending December 2024. The decline in profits can be attributed to several key factors, including weaker coal prices, a 20% decrease in iron ore prices, logistics challenges, and reduced offtake from domestic customers, notably Eskom. These challenges have significantly impacted Exxaro's financial performance. Riaan Koppeschaar, the Acting CEO and Finance Director of Exxaro, highlighted the difficulties the company faced in 2024 due to adverse market conditions. He pointed out that commodity prices, particularly in the coal and iron ore sectors, had decreased, further exacerbating the situation. Additionally, logistics constraints and reduced offtake from Eskom, the largest customer, added to the company's challenges. Looking ahead, Exxaro remains cautiously optimistic about the future. The company expects improvements in logistics as Transnet Freight Rail (TFR) volumes increase and the return of Unit 4 at Eskom's Madupi plant boosts demand. Exxaro is also considering participating in the reform of Transnet, following the government's call for private sector involvement in revamping the rail network. While the details of Exxaro's role in the reform are still being determined, the company is monitoring the situation closely. In terms of the external environment, Exxaro is keeping a close eye on global developments, particularly in light of the US administration's announcement of new tariffs on various goods. Cost pressures and geopolitical uncertainties pose challenges to the industry, but Exxaro remains confident in the demand for its coal products, especially from markets like India. The company is well-positioned on the cost curve to navigate any potential challenges in the supply chain. Overall, Exxaro is focused on improving its financial performance and operational efficiency in the coming year. The appointment of Ben Magara as CEO signals a new chapter for the company, as it seeks to overcome the challenges of the past year and drive sustainable growth in the future.