Kumba sees 131% improvement in earnings
Photo: Supplied Photo: Supplied
Johannesburg - Kumba Iron Ore pointed to a set of key interventions that reset the cost base and preserved cash as headline earnings per share increased by 131 percent to R27.30 for the year ended December 2016, compared to R11.82 the previous year. Kumba, a subsidiary of Anglo American, said controllable costs were reduced by 34 percent, lowering the average cash breakeven price to $29 per tonne.
The group's total revenue of R40.8 billion for the period increased by 13 percent from R36.1 billion in 2015, mainly as a result of the increase in average realised iron ore prices and the weaker average rand-dollar exchange rate.
Total production for the year was 41.5 million tonnes, a decrease of 8 percent and in line with planned lower mining volumes at Sishen Iron Ore mine.
CEO Themba Mkhwanazi said it had been a successful year for Kumba, despite challenging and volatile iron ore markets.
"We acted quickly to restructure the business, reset the cost base, and stabilise operating performance," Mkhwanazi said.
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"The rise in prices and realising full value for Kumba's premium product, together with our cost reductions, resulted in improved margins and strong cash flow generation.
"With total production of 41.5 million tonnes, both Sishen and Kolomela exceeded operational guidance following a successful restructuring."
This year's performance enabled Kumba to build a balance sheet and a net cash position of R6.2 billion.
To maintain balance sheet flexibility in the context of the Anglo American portfolio review, the board of Kumba decided not to declare a final 2016 dividend, but would review this again during the course of 2017.