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Kumba to report higher full-year earnings despite lower production, sales

28th January 2021

By: Creamer Media Reporter

     

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Iron-ore miner Kumba Iron Ore expects to report headline earnings of between R21.83-billion and R23.43-billion and headline earnings per share (HEPS) of between R68.07 and R73.06 for the year ended December 31.

That represents an increase of between 34% and 44% on the headline earnings of R16.31-billion and HEPS of R50.88 reported for the 2019 financial year.

Kumba, which will publish its financial results for the financial year on February 23, attributes the increase in headline earnings to a higher average free-on-board (FOB) export ore price and a weaker rand/dollar exchange rate.

The average FOB export iron-ore price for 2020 was $115/t, compared with $97/t in 2019.

Kumba's sales for 2020, however, decreased by 6% year-on-year to 39.7-million tonnes, which was driven by an 84% year-on-year decrease in domestic sales to ArcelorMittal South Africa to 400 000 t, while export sales decreased by 2% year-on-year to 39.3-million tonnes.

Production for the full-year decreased by 13% year-on-year to 37-million tonnes as a result of the impact of Covid-19.

“Kumba continues to prioritise the health, safety and wellbeing of our workforce and host communities while managing the impact of the ongoing Covid-19 pandemic.

"It is within this context that we have demonstrated value creation and resilience. Our integrated sales and operational teams adapted quickly to the challenging environment, optimising the value of our products to capitalise on a strong iron-ore market," comments CEO Themba Mkhwanazi.

FOURTH-QUARTER PERFORMANCE
The 9.57-million tonnes produced in the fourth quarter of 2020 was slightly higher than the 9.53-million tonnes produced in the third quarter of the year. Production for the quarter was, however, significantly lower than the 11.81-million tonnes produced in the fourth quarter of 2019.

Kumba points out that operational activities were hampered by above average rainfall and, to a lesser extent, equipment reliability and availability.

"We have improved our high rainfall readiness and associated recovery plans to mitigate such weather impacts going forward. On the equipment reliability front, we continue to drive our defect elimination and work management programmes and are seeing improvements as a result," it notes.

 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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