Kumba expects drop in headline earnings
IRON-ORE producer Kumba said yesterday it expected its headline earnings to fall between 34 and 37 percent for the half year to end June as a combination of a stronger exchange rate, lower export iron ore prices and derailments on the railway line linking its Sishen mine in the Northern Cape to Saldanha Bay hampered its performance.
Kumba, the world’s fourth largest iron ore producer, said in its production and sales report for the period that the earnings were likely to be between R2.884 billion and R3.033bn.
The company said basic earnings for the six months would be between R2.851bn and R2.998bn, a decrease of between 35 and 38 percent. Headline earnings per share were expected to be between R9.02 and R9.49.
The group also revised its full-year total sales guidance to between 42 and 44 million tons. The company attributed the reduction in forecasted tonnage to rail performance problems experienced in the six months ended June 30.
Kumba said it had trimmed the full-year production forecast “to more closely align to rail supply levels, as part of the integrated sales and operations planning drive and focus on optimal efficiency”.
It said it was working closely with Transnet to secure delivery of the contractual capacity and to mitigate further derailments.
The derailments affected Kumba’s export sales, which increased 1 percent to 9.6 million tons in the six months ended June 30.
Export sales fell 4 percent compared to the first quarter. Derailments were also a factor in the 2017 financial year, despite
the company reporting a 7 percent increase in total shipments to 41.6 million tons for the year.
Kumba said total production increased by 2 percent year-on-year, largely thanks to improved operational performance from the Sishen and Kolomela mines.
It said Sishen’s waste stripping increased by 4 percent to 44.4 million tons, up from the 42.7 million tons produced in the second quarter of last year.
Kumba kept the full-year guidance for waste stripping unchanged at between 170 million
tons and 180 million tons. Kolomela’s production increased by 4 percent to 3.6 million tons, compared to 3.5 million tons in the second quarter of last year.
Kumba shares closed 2.45 percent lower on the JSE yesterday at R300.45.