KUMBA Iron Ore will report record interim earnings in July following a period of sky-high prices for the steel-making ingredient.
The company said in a trading statement today headline earnings would be at least R12.6bn. This is a 150% year-on-year increase. Basic earnings would be similarly elevated at some R12.6bn.
“The period under review has to date seen higher average export iron ore prices and a stronger Rand/US Dollar exchange rate relative to the comparative six months ended 30 June 2020,” the company said.
Kumba reported a realised iron ore price of $183/t in its 2020 financial year which compares to an average of $153/t for the year before. However, these numbers pale against the $220/t price fetched by the mineral in May – potentially registering a significant operating margin as Kumba was reaching for unit costs of $34/t.
According to Oversea-Chinese Banking Corporation, iron ore could increase to as much as $250/t in the next 12 to 18 months.
The improvement in the iron ore price took shares in Kumba to a record high in May when it was trading at R717.19/share, valuing the company at nearly R230bn – double its value of 12 months ago. Kumba’s current market capitalisation is R198.7bn.
The expected performance spells good news for Anglo American which owns 70% of Kumba, and earlier this week registered an improved revenue performance in the diamond sector through its 85% stake in De Beers.
Anglo American, which is due to report its interim numbers on July 29, will also have its performance bolstered by strong income from Anglo American Platinum (Amplats). As with iron ore, platinum group metal pricing has reached record highs.
Kumba is due to report its interim numbers on July 27.