Kumba’s earn­ings get a shot in the arm

Iron ore prices are a big fil­lip

The Star Early Edition - - COMPANIES - Di­neo Faku

KUMBA Iron Ore, a sub­sidiary of An­glo Amer­i­can, and Africa’s big­gest iron ore pro­ducer, said stronger prices for the steel-mak­ing in­gre­di­ent had helped boost its earn­ings in the half year to June.

Kumba re­ported on Fri­day that it ex­pected head­line earn­ings for the six months to June to be between 46 per­cent and 59 per­cent higher com­pared with the same pe­riod last year and range between R13.70 and R14.85 a share.

The in­crease would trans­late to head­line earn­ings of between R4 373 mil­lion and R4 741m.

Kumba also said that it ex­pected ba­sic earn­ings a share to be between R13.64 and R14.79, an in­crease of between 47 per­cent and 59 per­cent and ba­sic earn­ings for the pe­riod ex­pected to be between R4 355m and R4 722m.

This was higher than the re­ported head­line earn­ings and ba­sic earn­ings for the com­par­a­tive pe­riod which were R3 009m and R2 974m re­spec­tively, while re­ported head­line earn­ings a share for the com­par­a­tive pe­riod were R9.41 and R9.30 re­spec­tively.

“The in­crease in earn­ings for the pe­riod is largely at­trib­ut­able to higher ex­port iron ore prices, par­tially off­set by the stronger rand/dol­lar ex­change rate,” the com­pany said.

Iron ore prices gained 1.2 per­cent last Tues­day to trade at $64.70 a ton ac­cord­ing to data sup­plied by The Steel Index.

The bet­ter fi­nan­cial per­for­mance at Kumba fol­lowed news from Statis­tics SA that min­ing out­put had grown by 3.6 per­cent year on year in May af­ter ris­ing 1.6 per­cent year on year the pre­vi­ous month.

Stats SA said last Thurs­day that the im­proved pro­duc­tion was sup­ported by strong per­for­mance of the iron ore sec­tor.

Min­ing ore pro­duc­tion was 28.6 per­cent in May com­pared with 29.9 per­cent in April. Iron ore com­prises 14.9 per­cent of the min­ing pro­duc­tion index. China’s in­fra­struc­ture and prop­erty con­struc­tion spend and lower iron ore sup­ply growth were be­hind the in­crease in iron ore pro­duc­tion.

Kumba chief ex­ec­u­tive, Themba Mkhwanazi, said in last year’s an­nual re­port that the iron ore price was higher than ex­pected.

“This higher price had been driven by record liq­uid­ity in­jec­tion and ac­cel­er­ated in­fra­struc­ture spend­ing, fur­ther aided by im­prov­ing steel mill mar­gins, slow­ing iron ore sup­ply growth and ris­ing spec­u­la­tive ac­tiv­ity on the futures mar­ket.”

How­ever, Kumba’s share price on Fri­day de­clined 1.28 per­cent to R171.28 a share in late trade as in­vestors ex­pected bet­ter fi­nan­cial re­sults.


A worker sig­nals to a haul truck driver at Kumba Iron Ore, the world’s largest iron ore mine, in Kathu, North­ern Cape Prov­ince, in this file photo. The com­pany’s earn­ings were re­cently boosted by stronger prices.

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