Caution after great results
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.