ANL 34.14 Increased By ▲ 1.04 (3.14%)
ASC 14.77 Increased By ▲ 0.42 (2.93%)
ASL 24.81 Increased By ▲ 0.33 (1.35%)
AVN 91.75 Decreased By ▼ -0.75 (-0.81%)
BOP 9.10 Increased By ▲ 0.04 (0.44%)
BYCO 9.79 Increased By ▲ 0.09 (0.93%)
DGKC 133.21 Increased By ▲ 1.02 (0.77%)
EPCL 50.50 Increased By ▲ 0.40 (0.8%)
FCCL 24.60 Increased By ▲ 0.30 (1.23%)
FFBL 25.91 Increased By ▲ 1.51 (6.19%)
FFL 15.35 Increased By ▲ 0.33 (2.2%)
HASCOL 10.52 Decreased By ▼ -0.04 (-0.38%)
HUBC 86.36 Increased By ▲ 1.26 (1.48%)
HUMNL 6.93 Increased By ▲ 0.18 (2.67%)
JSCL 25.50 Increased By ▲ 0.25 (0.99%)
KAPCO 41.55 Increased By ▲ 2.80 (7.23%)
KEL 3.99 Increased By ▲ 0.01 (0.25%)
LOTCHEM 14.50 Increased By ▲ 0.07 (0.49%)
MLCF 46.15 Increased By ▲ 0.27 (0.59%)
PAEL 36.98 Increased By ▲ 0.28 (0.76%)
PIBTL 11.57 Increased By ▲ 0.14 (1.22%)
POWER 10.22 Increased By ▲ 0.07 (0.69%)
PPL 90.84 Increased By ▲ 1.14 (1.27%)
PRL 26.30 Increased By ▲ 0.05 (0.19%)
PTC 8.74 Increased By ▲ 0.14 (1.63%)
SILK 1.34 Decreased By ▼ -0.01 (-0.74%)
SNGP 42.46 Increased By ▲ 1.06 (2.56%)
TRG 145.75 Increased By ▲ 2.65 (1.85%)
UNITY 30.05 Increased By ▲ 0.26 (0.87%)
WTL 1.40 Decreased By ▼ -0.02 (-1.41%)
BR100 4,942 Increased By ▲ 54.15 (1.11%)
BR30 25,673 Increased By ▲ 397.03 (1.57%)
KSE100 45,768 Increased By ▲ 489.59 (1.08%)
KSE30 19,152 Increased By ▲ 253.84 (1.34%)
Business & Finance

Kumba Iron Ore pays out cash and invests in Sishen mine after strong profits

  • Kumba Iron Ore reports 40% rise in FY profit.
  • Declares higher final dividend.
  • To invest 3.6 bln rand to extend Sishen life of mine.
23 Feb 2021

JOHANNESBURG: South African miner Kumba Iron Ore reported a 40% jump in annual profit on Tuesday and declared a strong dividend payout, driven by a surge in prices of the steel-making raw material and a weaker rand exchange rate during the year.

Majority shareholder Anglo American Plc will be a beneficiary of the strong dividend payout after Kumba reported headline earnings per share of 71.07 rand ($4.86) for the year ended December 2020, up from 50.88 rand a year earlier.

Kumba, which runs the Sishen and Kolomela mines in South Africa, declared a final dividend of 41.30 rand per share, or 85% of headline earnings, bringing the full-year dividend to 60.90 rand, or 30% higher than its final dividend of 46.78 rand a year earlier.

Iron ore prices soared in 2020, driven by China's rapid economic recovery and a focus on infrastructure. A weaker rand, which reduces costs, further boosted full-year earnings.

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) during the year jumped 57% to a record of 45.8 billion rand, the company said.

Attributable free cash flow during the year rose 21% to 20.7 billion rand.

However, 2020 output fell to 37.0 million tonnes from 42.4 million a year earlier, hit by coronavirus-related operational and logistical constraints and lower off-take from steel producer ArcelorMittal South Africa.

"Given that Kumba is in a net cash position, they could pay out almost all of their free cash flows as dividends, with majority shareholder Anglo American receiving almost $1 billion from Kumba," said Investment Analyst at Sanlam Private Wealth, Christiaan Bothma.

Kumba said it planned to spend 3.6 billion rand to extend the life of its Sishen mine to 2039 through the ultra-high dense media separation project which was approved in February.

The project at the Sishen mine in Northern Cape province is expected to begin in the second half of 2023.