Thungela maintains strong financial position despite 80% drop in profits

Thungela has net cash holdings of R6.3 billion, and is in a position to pursue strategic investments

- TAWANDA KAROMBO-

THUNGELA Resources remains in a strong financial position despite an 80% plunge in interim profits for the period to end June, with its stronger balance helping it to continue with strategic investments after paying a R2 per share half-year dividend.

Shares in Thungela were 2.74% weaker at R88.17 in afternoon trade on the JSE on Monday, extending the stock's 6% and 5% fall in the past seven and 30 days, respectively.

Headline earnings per share (HEPS) for the half-year period to June 30 fell by 80% to 192 cents on the back of lower coal prices on global markets, although its strong balance sheet brightened up future prospects.

“Despite challenging markets, Thungela’s balance sheet is strong,” said Greg Davies, head of wealth at Cratos Capital.

Thungela has net cash holdings of R6.3 billion, which will help the company by “ensuring financial resilience” in spite of the 12% plunge in interim revenues to R14.8bn.

More importantly, Thungela is set to “continue (with) strategic investments” such as the Zibulo North Shaft and Elder, which are “on track” and crucial “for long-term sustainability as some mines approach closure,” said Davies.