Thungela’s 2025 scorecard: heavy impairments, resilient operations, and a R2 final dividend
Thungela has posted a statutory loss for 2025 driven by large non-cash impairments, but the operational engine kept humming and the board has still declared a final ordinary dividend of R2 per share. Production beat guidance, unit costs were better than planned, and the balance sheet remains in net cash.
For retail investors, this is a classic split-screen year: accounting pain on one side, operational delivery on the other. Here’s what stood out – and what to watch in 2026.
Key numbers at a glance
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Revenue | R29,599 million | R35,554 million | -17% |
| Adjusted EBITDA (margin) | R1,216 million (4.1%) | R6,255 million (18%) | -81% (-14pp) |
| (Loss)/Profit for the period | R(7,107) million | R3,544 million | -301% |
| (Loss)/Earnings per share | (5,464 cents) | 2,676 cents | -304% |
| Headline (loss)/earnings per share | (647 cents) | 2,559 cents | -125% |
| Adjusted operating free cash flow | R396 million | R3,589 million | -89% |
| Net cash | R5,054 million | R8,671 million | -42% |
| Group export saleable production | 17.8 Mt | 17.6 Mt | ~+0.2 Mt |
| FOB cost per export tonne ex-royalties – South Africa | R1,170/t | R1,130/t | +3.5% |
| FOB cost per export tonne ex-royalties – Ensham | R1,435/t | R1,433/t | Flat |
| Dividend per share (full year) | 400 cents | 1,300 cents | -69% |
Notes: Adjusted EBITDA is a cash profit measure before interest, tax, depreciation and amortisation; adjusted to remove certain items. FOB cost is free-on-board cost per exported tonne. Adjusted operating free cash flow is operating cash generation after sustaining capital. These are alternative performance measures used by management.
What drove the loss: non-cash hits and softer prices
The Group recognised R8.8 billion of non-cash impairment losses, reflecting lower benchmark coal price forecasts and currency shifts – a weaker US dollar and a stronger South African rand. These impairments do not affect liquidity or operational capacity, but they do pull the income statement deep into the red.
Revenue fell 17% to R29.6 billion as realised prices came down: South Africa averaged R1,336 per tonne (-20%) and Ensham R1,877 per tonne (-17%). Against that backdrop, adjusted EBITDA dropped to R1.2 billion with a 4.1% margin.
Operations: guidance exceeded and costs under control
Operationally, Thungela delivered. Group export saleable production reached 17.8 Mt, about 175 kt higher year-on-year. South Africa contributed 13.9 Mt, above guidance (12.8-13.6 Mt), helped by strong Mafube performance and the Annea Colliery ramp-up. Australia’s Ensham delivered 4.0 Mt, at the upper end of guidance (3.7-4.1 Mt) despite first-half geology issues.
Unit costs beat guidance in both regions. South Africa’s FOB cost per export tonne excluding royalties came in at R1,170 (below R1,210-R1,290 guidance), and Ensham at R1,435 (below R1,470-R1,580), reflecting productivity gains and disciplined cost management. Transnet Freight Rail’s performance improved to 56.8 Mt from 51.9 Mt, a helpful tailwind for exports.
Safety remains a cultural anchor. The business operated fatality-free for the third consecutive year, though the total recordable case frequency rate rose to 2.83 from 1.93 during a production footprint transition – prompting targeted interventions.
Cash generation, net cash and capex
Despite the weaker market, the Group generated R2.4 billion in cash flows from operating activities. After R2.0 billion of sustaining capital, adjusted operating free cash flow was positive at R396 million. Year-end net cash stood at R5.1 billion, with an additional R3.2 billion of undrawn facilities and a maintained cash buffer of approximately R4.7 billion.
Total capital expenditure was R3.1 billion, with R747 million deployed to complete life-extension projects in 2025. Cumulatively, Thungela has invested R4.2 billion in Annea Colliery and Zibulo North Shaft, plus R382 million on the Lephalale Coal Bed Methane (LCBM) project.
Capital returns: dividend held at R4 for the year, buybacks executed
The board declared a final dividend of R2 per share (R281 million), taking the full-year dividend to R4 per share. Notably, adjusted operating free cash flow was positive in H1 (R484 million) and negative in H2 (R88 million), so the board used discretion under its policy of paying at least 30% of adjusted operating free cash flow.
Total shareholder returns relating to 2025 performance were R701 million – the two dividends plus a R139 million buyback completed after the interim results – equal to 177% of adjusted operating free cash flow. Across the calendar year, Thungela returned R2.2 billion via cash dividends and share buybacks, including two buybacks totalling R469 million for 4,858,231 shares (3.5% of issued share capital).
Portfolio reshaping: new volumes in, legacy out
The transition is well advanced. Annea Colliery and Zibulo North Shaft life-extension projects were delivered on time and on budget and are ramping up. Goedehoop North and Isibonelo have reached end-of-life; Isibonelo ceased operations in December 2025 and moved into care and maintenance.
Disposals are under way: the sale of Goedehoop North has been announced and an agreement has been concluded for the disposal of the Kleinkopje mining right at Khwezela Colliery, with rehabilitation liabilities transferring to buyers on completion (expected in 2026). The LCBM modular LNG demonstration plant is targeting commissioning in H1 2026 to supply gas to a generator at Annea, reducing reliance on Eskom electricity.
Market backdrop: depressed most of the year, modest recovery late on
Coal markets were generally weak in 2025. Softer seaborne demand from China and India, higher gas and nuclear utilisation in Japan, Korea and Taiwan, and steady supply from Indonesia, Australia and South Africa kept pressure on prices. A moderate recovery arrived late in the year on restocking and Indian sponge iron demand, which helped South African export coal.
FX also mattered. A stronger rand against a weaker US dollar squeezed rand-reported revenues and price realisations, adding to the headwinds already present from global coal prices.
2026 guidance: steady volumes, higher costs with inflation, modest capex
- South Africa export saleable production: 13.0-13.6 Mt, reflecting the footprint transition and expected TFR improvements. Annea to reach steady-state in 2026; Zibulo North ramps through 2027; 2026 is the final year for Zibulo opencast.
- Ensham export saleable production: 3.9-4.2 Mt, off a more stable operating base.
- FOB cost per export tonne ex-royalties: South Africa R1,320-R1,370; Ensham R1,480-R1,570. Including royalties: South Africa R1,330-R1,380; Ensham R1,650-R1,740.
- Sustaining capex: South Africa R700 million-R1.0 billion; Ensham R500 million-R700 million. Expansionary capex: South Africa ~R100 million (Zibulo North completion activities); Ensham nil.
Why this matters for investors
The good
- Operations delivered above guidance with costs below plan – that is real execution in a tough market.
- Balance sheet resilience: R5.1 billion net cash, a ~R4.7 billion cash buffer, and undrawn facilities of R3.2 billion.
- Capital discipline: projects delivered on time and budget; sustaining capex contained; disposals reduce closure and rehab burden.
- Shareholder returns continued despite the cycle – full-year dividend of R4 per share and buybacks executed.
The challenges
- Non-cash impairments of R8.8 billion reflect a lower long-term price deck and FX effects, which reset asset values and dent confidence.
- Earnings power was hit hard: adjusted EBITDA margin fell to 4.1%, with adjusted operating free cash flow down 89%.
- H2 saw negative adjusted operating free cash flow, underscoring sensitivity to coal prices, FX and logistics.
- Safety frequency rates ticked up during transition, requiring close monitoring of the targeted interventions.
My take: execution strong, valuation reset, dividends still flowing
This is a tale of two lines: the P&L shows a painful, non-cash reset, while the operating lines show a team hitting or beating plan. The decision to pay a R2 final dividend looks supported by net cash and the cash buffer, even if it required policy discretion given the H2 dip in adjusted operating free cash flow.
Into 2026, the watchlist is clear: delivery of the Annea and Zibulo North ramp-ups, stability at Ensham, TFR performance, and how coal prices and FX evolve. If unit costs stay within guidance and logistics continue to improve, Thungela’s operational leverage gives it options – including ongoing shareholder returns within its capital allocation framework.
Bottom line: operational excellence and balance sheet strength have cushioned a weak market and a big impairment. If the late-2025 pricing recovery holds and guidance is met, 2026 can be a steadier year.
