Thungela Resources Share Price (JSE: TGA) Drop on Weak H1, Dividend and Buyback Offer Support
Thungela Resources’ first-half earnings release on Monday triggered a sharp selloff in its shares, reflecting weaker profitability as coal..
Quick overview
- Thungela Resources experienced a significant drop in first-half profits, falling 79% year-over-year due to lower coal prices and rising costs.
- The company's stock fell 8% following the earnings release, continuing a three-year decline, although it later rebounded with broader market sentiment.
- Despite the challenges, Thungela maintained its interim dividend and announced a new share buyback program to support investor confidence.
- The outlook remains uncertain, heavily reliant on the trajectory of global thermal coal prices and the ongoing transition in energy demand.
Thungela Resources’ first-half earnings release on Monday triggered a sharp selloff in its shares, reflecting weaker profitability as coal prices and higher costs weighed on results.
Market Reaction and Share Performance
Following the announcement, Thungela’s stock tumbled 8% to trade below R84, continuing a three-year decline that began in 2022 when the share price was above R383. Later in the week, the stock rebounded in line with a broader recovery in market sentiment, but the long-term trend remains firmly bearish. Unless prices break above key moving averages on the charts, market momentum continues to favor sellers.
TGAj Chart Weekly – MAs Keeping the Price Subdued
Financial Results and Sector Pressures
The interim results highlighted the severe impact of softer coal prices on profitability. First-half profits dropped sharply, with margins squeezed further by rising costs. Revenues held relatively steady, and production in South Africa showed modest growth, but these gains were not enough to offset the broader earnings contraction. The unchanged dividend demonstrated confidence in balance sheet resilience, yet the company’s outlook remains tethered to the global trajectory of thermal coal prices.
Thungela Resources Financial Performance – H1 2025
- Profit: Fell 79% YoY to ZAR248 million, down from ZAR1.19 billion.
- Revenue: Declined 12% YoY to ZAR14.81 billion, versus ZAR16.75 billion in the prior year.
Drivers of Decline:
- Lower realized export coal prices in South Africa (-11%) and Australia (-10%).
- This price pressure was the key factor behind the sharp earnings contraction.
Dividend Announcement
- Interim Dividend: Declared at 200 South African rand cents per share, unchanged from the prior year.
- This reflects the company’s commitment to shareholder returns despite weaker profitability.
Production Trends
- South Africa: Export saleable production increased 4%, reaching 6.4Mt (vs. 6.2Mt previously).
- Ensham (Australia): Production fell 16% to 1.6Mt (vs. 1.9Mt previously).
- The divergence highlights regional differences, with South Africa showing resilience while Ensham struggled.
Guidance & Outlook
- Export Saleable Production (South Africa): Maintained at 12.8–13.6Mt for the full year.
- FOB Cost Guidance: Expected between R1,210–R1,290 per export ton.
- CEO July Ndlovu emphasized maintaining operational discipline while navigating price headwinds.
Strategic Updates and Outlook
To support investor sentiment, Thungela announced a new share buyback program alongside its interim dividend. The company also reaffirmed its full-year guidance, maintaining production and cost targets. Outgoing CEO July Ndlovu emphasized that coal is set to remain part of the global energy mix for longer than previously anticipated, arguing that high-quality thermal coal continues to play a vital role in meeting energy demand. Despite ongoing macroeconomic uncertainties and shifting attitudes toward fossil fuels, Thungela signaled conviction in its strategic direction.
TGAj Chart Monthly – Buyers Need to Break Above the 20 SMA
Conclusion: Thungela’s interim earnings underscored the challenges of operating in a lower coal price environment, with profitability sharply weaker and the share price extending a multi-year downtrend. Still, the company’s commitment to dividends, a new buyback plan, and stable guidance offer some reassurance. Longer-term, however, Thungela’s fortunes remain heavily dependent on coal market dynamics and the broader transition in global energy demand.
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