Kumba’s earnings get a shot in the arm
Iron ore prices are a big fillip
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.