PRETORIA-headquartered Kumba Iron Ore yesterday flagged rip-roaring earnings for the half-year ended June, but lowered its 2021 sales guidance by 1 million tons due to rail constraints and poor weather during the first half of the year.
Kumba, an Anglo American plc subsidiary, said in its trading statement for the six months ended June 2021 that subject to Covid-19, unrest, rail and weather disruptions, it had revised its sales forecast to between 30 million tons and 40 million tons from a previous estimate of between 40 and 41 million tons.
Kumba said export sales were up 5 percent to 19.4 million tons in the six months ended June 2021 compared to 18.6 million tons a year earlier and were 12 percent higher during the second quarter compared with the second quarter of 2020.
The iron ore producer, which operates the Kolomela and Sishen mines in the Northern Cape, said that together with domestic sales, total sales were 3 percent higher to 19.5 million tons compared with 18.9 million tons in 2020. “However, the impact of rail constraints in the first four months and subsequent disruptions to shipments in June due to equipment breakdown and inclement weather at Saldanha Port, led to a 10 percent decrease in the second quarter of this year, compared to first quarter sales of 10.3 million tons,” said Kumba.
Kumba recorded a 12 percent jump in production to 20.4 million tons, up from 18.2 million tons a year earlier, driven by an 11 percent production improvement at Sishen to 13.9 million tons and a 14 percent output growth at the Kolomela mine at 6.4 million tons.
Kumba said relative to the second quarter in 2020, which was affected by Covid-19-related disruptions, production had increased by 14 percent to 9.8 million tons, up from 8.6 million tons in the same period last year. However, compared to the 10.6 million tons achieved in the first quarter of 2021, production was reduced by 7 percent as it managed down high stock levels that had built up at the mines due to rail constraints.
Kumba flagged that it would report roaring earnings for the half year under review on higher metal prices.
The group said headline earnings for the period would likely be between R22.755 billion and R23.690bn, an increase of between 171 and 182 percent from the previous comparable six months ended June 30, 2020. Headline earnings per share were likely to be between R70.96 and R73.87, an increase of between 171 and 182 percent from the comparative period. “The increase in earnings for the period is largely attributable to higher average realised free on board export iron ore prices and higher total sales volumes, partially offset by the
stronger rand/US dollar exchange rate, relative to the comparative period,” said Kumba. Kumba is scheduled to provide the company’s results on Tuesday.
Iron ore prices have surged to record highs driven by strong demand from China, the world’s top steel consumer. The strong price environment for metals were a major contributor to South Africa’s trade surplus recorded in May.
Kumba said it had to date achieved over five years of fatality-free production.
Kumba shares closed 1.78 percent higher at R702.50 on the JSE yesterday.
BUSINESS REPORT