Exxaro Resources share price target and broker ratings post FY23 results

The key takeaways from Exxaro Resources Limited's financial results for the year ended 31 December 2023 are as follows:

1. Revenue and Profit Decline: Exxaro experienced a significant reduction in its financial performance with revenue dropping by 17% from R46.4 billion to R38.7 billion, and net operating profit decreasing by 34% from R16.2 billion to R10.6 billion compared to the previous year. These declines illustrate the challenges faced by the company in the reporting period.
2. Earnings Per Share Reduction: Both the Average Earnings Per Share (AEPS) and the Headline Earnings Per Share (HEPS) saw a downturn. AEPS decreased by 18% to 4,666 cents, and HEPS decreased by 22% to 4,681 cents, indicating lower profitability on a per-share basis.
3. Dividend Adjustments: Despite the downturn, Exxaro declared a final dividend of 1,010 cents per share, a slight decrease from the previous year's 1,136 cents per share. Additionally, the company has declared a special dividend of 572 cents per share, signaling its intention to reward shareholders despite financial headwinds.
4. Strong Cash Position: The decision to pay a special dividend was supported by a substantial net cash position of R14,834 million (excluding Energy net debt) as of 31 December 2023. This demonstrates Exxaro's solid liquidity and financial resilience.
5. Dividend Payment Dates and Taxation: Shareholders should note the final and special dividends are payable on 13 May 2024, to those on the register by 10 May 2024. Both dividends are subject to a 20% withholding tax, unless exempt or qualifying for a reduced rate. Additionally, the special dividend's implementation is pending approval from the South African Reserve Bank (SARB), with further announcements to be made once approval is secured.

Exxaro FY23 results in brief

Exxaro Resources Limited disclosed its financial results for 2023 with a decline in key metrics; revenue fell to R38.7 billion (-17%), and net operating profit to R10.6 billion (-34%), with similar drops in AEPS and HEPS. Despite these challenges, the company declared a final dividend of 1,010 cents per share and a special dividend of 572 cents per share, exhibiting their ongoing commitment to shareholder returns. These results reflect the volatility in the commodities market and operational hurdles. The dividends are part of Exxaro's strategy to reward its shareholders amidst a tough financial year, with payments scheduled for May 2024, subject to regulatory approval and stipulated conditions regarding dividend withholding tax. Investors are urged to consult the full financial statements for a comprehensive understanding.

Long term broker ratings and price target

A consensus of 8 analyst estimates sourced from Refinitiv data (as of the 14th of March 2024) suggests a long-term buy for Exxaro Resources. A mean of these analyst’s price targets suggests a long term (12 month) fair value of 21500c for the stock.