Cau­tion af­ter great re­sults

Finweek English Edition - - Market Place -

Kumba re­sults looked great and it of­fered a very chunky div­i­dend, but some cau­tion is needed. The div­i­dend, at 1 597c, was more than the HEPS of 1 442c in or­der to com­pen­sate share­hold­ers for the missed div­i­dend. Great for cur­rent share­hold­ers but it does mean a much lower div­i­dend go­ing for­ward, un­less prof­its boom fur­ther. How­ever, with cash cost per tonne now at $42 com­pared with $29 in the pre­vi­ous pe­riod, prof­its are not likely to boom much fur­ther un­less iron ore prices move higher or the rand weak­ens. If you al­ready hold Kumba I would con­tinue to do so; you’ll get the chunky div­i­dend and some more price up­side is likely, but I would not be en­ter­ing a new po­si­tion in Kumba at this point.

A blast se­quence at Kumba Iron Ore’s Kolomela mine in the North­ern Cape.

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