Economy

Kumba Iron Ore reinstates dividend after H1 profit jump

Delivering first-half results, the South Africa-based company noted that more efficient production helped boost earnings in the period earnings by 53%. The firm, majority owned by Anglo American Plc, will pay a dividend of R15.97 a share, the first since halting payouts in 2015 amid a collapse in ore prices.

Shares in Anglo American were up 4.9% at 1,158.18 pence Thursday, one of the best performers in the FTSE 100 index.

"While the overall progress has been very encouraging, substantial effort was required simply to offset cost inflation and there is no room for complacency", he said. "The team is therefore examining every aspect of the value chain in order to improve Kumba's ability to endure any future price volatility", he said.

"We are also confident that our rights, despite whatever may be developing, are secure and because of that we are protected", Mkhwanazi said.

Kumba expects full-year production of up to 43-million tonnes, with about 29-million tonnes of that coming from its flagship Sishen mine.

Kumba, a unit of global mining group Anglo American, said softer steel demand in the second half was expected to pressure cash flow.

Sales volumes grew by 5% to 21.2-million tonnes, with export tonnages growing by more than a million tonnes to 19.5-million tonnes because of improved output.

Shares in Kumba Iron Ore (JSE:KIO) rallied Tuesday after the miner announced it would reinstate dividends after a two-year hiatus thanks to stronger prices for the steelmaking ingredient earlier this year. However, Mkhwanazi said there had been a pleasing improvement in productivity.

Goldman Sachs said that while the results represented "a slight miss" on its estimates, the dividend came in "much ahead" of its estimate of R4,96 per share.

That was in line with what the company had flagged to the market.



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