KUMBA Iron Ore would report interim headline earnings up to 19% lower as a result of a decline in first half production as well as lower iron ore prices.
Commenting in an operating and trading update – in which production fell 11% to 17.9 million tons (Mt) – the company said headline earnings would be between R25.37 and R26.68 per share – a decline of 15% to 19%. This compares to earnings of R31,51/share in the corresponding period of the previous financial year.
Production was most heavily affected by lockdown measures imposed by the South African government during the second quarter which led to a 19.6% decline to 8.5Mt.
Kumba’s sales were also affected by the lockdown. They fell 13% to 18.6Mt owing to poor coastal weather conditions. Export sales fell 8% to 18.3Mt. Stock levels were drawn down some 200,000 tons to 6.2Mt of which 2.4Mt in stocks were at port.
The weaker rand/dollar exchange rate partially offset the weaker iron ore pricing. Further details will be published when Kumba announces its interim results scheduled for July 28.
Said Themba Mkhwanazi, CEO of Kumba: “While our operational performance reflects the impact of the lockdown and subsequent re-opening with a reduced proportion of our workforce, we successfully ramped up to close to full capacity in June 2020”.
“Our focus is on maintaining flexibility and performance along our value chain to protect run-rates and capture the benefits of healthy demand for our quality products,” he said. Shares in Kumba were unchanged on the Johannesburg Stock Exchange.