Exxaro Resources fell to the lowest in more than five years in Johannesburg after South Africa’s third-largest coal producer said earnings may drop at least 20% because of lower income from an investment in iron ore.
The shares declined as much as 8.5% to the lowest since November 2009 and traded 4.17% down at R89.60 at the close.
Headline earnings for the first half through June 30 will probably decrease at least R563 million ($47 million) from R2.81 billion a year earlier, the Pretoria-based company said in a statement Tuesday.
Profit will fall because of the significant decrease in the export iron-ore prices that has affected Sishen Iron Ore, which operates Africa’s biggest mine for the steelmaking ingredient and in which Exxaro has a 19.98% stake. Anglo American’s Kumba Iron Ore holds 73.9% of the operation and a community development trust the rest.
Iron-ore prices have declined 40% in the past 12 months and touched a decade low last month as Rio Tinto Group and BHP Billiton in Australia and Brazil’s Vale SA expanded low-cost output to boost volumes and cut costs, spurring a glut as demand in China, the largest buyer, slowed.
Exxaro’s attributable loss for the first half will probably narrow at least 20% from 2.44 billion last year.
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