Home » News » Business » Anglo American plc’s unit Kumba annual earnings soars to P41.1 billion

Anglo American plc’s unit Kumba annual earnings soars to P41.1 billion

Publishing Date : 20 February, 2020


South Africa’s Kumba Iron Ore Limited, a unit of Botswana Stock Exchange (BSE) listed British multinational mining Anglo American plc, revenue soared by 41 percent, from P33.5 billion to P47.1 billion.


According to the company’s audited financial results for 2019, the increased in returns is mainly attributed to result of stronger iron ore prices, higher market premiums and currency gains, which were partially offset by lower sales volumes due to the lower domestic offtake.


The mining company’s iron ore export price increased by 35 percent to US$97/tonne from US$72/tonne in 2018, while the average Rand/US$ exchange rate weakened by 9percent to R10.61/US$1 in 2018 to R9.72/US$1 in 2019.


On the Operating expenses, excluding mineral royalties and impairment, the South African mining company saw an increased to P24.22 billion as compared to P20.92 billion recorded in 2018 mainly due to P2.28 billion higher operational costs and a P1.03 billion increase in logistics costs.


“The rise in operational cost is primarily attributable to P1.10 billion from the utilisation of Work in Progress (WIP) stock at Sishen and P95 millions of higher maintenance costs, of which P480.80 million related to unscheduled maintenance activities caused by equipment and plant breakdowns,” reads the annual results.


“Selling and distribution costs increased by 5 percent to P4.77 billion largely due to higher demurrage costs caused by port constraints and above-inflation increases in Transnet tariffs.”


Kumba Iron Ore Chief Executive Officer (CEO), Themba Mkhwanazi said, the company’s strategy has helped deliver exceptional earnings growth, as we continue to increase the resilience of the business. Against challenging operational conditions, we marked another year of strong financial performance with EBITDA up by 62 percent to P24.52 billion.


According to the statement posted in BSE, Mkhwanazi said financial performance of the company reflects the benefits of higher iron ore prices also improved efficiencies and further cost savings ahead of their target.


“These results were also achieved through a persistent focus on safety as we maintained our accident free track record since May 2016 and our commitment to responsible production, focused on unlocking value from our world-class assets, has in turn allowed us to help build thriving communities and improve people’s lives,” said Mkhwanazi.


Mkhwanazi further stated that the company’s EBITDA margin has increased to 52 percent and cash flow from operations is up by 79 percent to P25.47 billion.


He said the strong performance and robust balance sheet was result of the Board decision after they declared a final cash dividend of R15.99 per share.


“Combined with the interim dividend of R30.79 per share, this represents a total payout ratio of 92 percent of headline earnings per share for 2019, in excess of our 50 percent to 75percent dividend payout policy. In total we have created value of P14.39 billion for shareholders this year,” he indicated.


Kumba CEO added that since the company embarked on margin enhancement strategy, Kumba’s return on capital employed has improved from 49 percent in 2018 to 83 percent in 2019, reflecting favourable markets.


He went on according to the statement said the South African’s company was focused on optimising the value of assets and generating strong cash flows in order to improve returns.