Kumba Iron Ore posts 17% decline in interim earnings

Leeufontein pit at the Kolomela iron ore mine. Source: Flickr

South Africa’s Kumba Iron Ore on Tuesday reported a steep decline in interim earnings for the first half of 2020 due to the impact of the covid-19 pandemic on output and sales.

Headline earnings per share, the main profit measure used in South Africa, fell 17% to 26.19 rand for the six months ended on June 30, compared with 31.51 rand a year earlier.

During the period, iron ore production dropped by 11% to 17.9 million tonnes compared with the same period a year ago. Sales volumes also declined by 13% to 18.6 million tonnes. Both figures were in line with the company’s covid-19 adjusted guidance for the first half of the year.

However, the Anglo American unit remained upbeat about its ability to withstand the turmoil and declared an interim cash dividend of 19.60 rand, representing a payout ratio of 75% of headline earnings.

“We are a resilient and capital efficient business with a robust balance sheet, well positioned to navigate the current environment and the longer term,” said Kumba chief executive Themba Mkhwanazi.

The company also approved a 7 billion rand ($426 million) project to develop the new Kapstevel South pit at its Kolomela operations in the Northern Cape province.

The project, which is expected to deliver its first ore in 2024, will contribute to sustaining production of 13 Mt for the remaining life of the Kolomela mine.

($1 = 16.4506 rand)

(With files from Reuters)

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