JSE-listed Kumba Iron Ore is working closely with State-owned freight utility Transnet to secure the delivery of the contractual capacity and to mitigate derailments that affected the company’s export sales in the second quarter of the year.
The company’s export sales increased by only 1% to 9.6-million tonnes, compared with the 9.4-million tonnes sold in the second quarter of 2017. Export sales were adversely affected by derailments along the iron-ore export channel, including as a result of weather disruptions at the Saldanha Bay port and sub-optimal rail performance.
Owing to the rail performance challenges experienced in the first six months of the year, Kumba’s full-year sales guidance has been revised to between 42-million and 44-million tonnes, down from the between 44-million and 45-million tonnes previously guided.
The full-year production guidance was also revised down to between 43-million and 44-million tonnes to more closely align output to rail supply levels.
Nonetheless, Kumba’s production for the second quarter increased by 2% year-on-year to 11-million tonnes as a result of a solid operational performance from both its Sishen and Kolomela mines, in the Northern Cape.
Sishen produced 7.9-million tonnes, while Kolomela produced 3.6-million tonnes, compared with the 7.8-million tonnes and 3.5-million tonnes respectively in the second quarter of 2017.
Sishen’s waste stripping increased by 4% to 44.4-million tonnes, from the 42.7-million tonnes produced in the second quarter of 2017, owing to ongoing improvements in productivity.
The full-year guidance for waste stripping remains unchanged at between 170-million and 180-million tonnes.
In light of the revised production and sales guidance, Kumba anticipates its headline earnings per share (HEPS) and earnings per share (EPS) for the second quarter to be at least 20% lower year-on-year.
Headline earnings are now likely to be between R2.8-million and R3-million, a decrease of between 34% and 37%, while basic earnings for the period are expected to be between R2.8-million and R2.9-million, a decrease of between 35% and 38%.
Therefore, Kumba anticipates HEPS of between R9.02 and R9.49, and EPS of between R8.92 and R9.38 for the second quarter.