JOHANNESBURG - Kumba Iron Ore on Tuesday pointed to a higher iron ore price and a weaker rand as it reported a whooping increase in net profit to R13.2 billion in the six months ended June 30 compared with R3.9 billion last year.
Kumba, a unit of Anglo American and a supplier of high-quality iron ore to the global steel industry, said headline earnings were up 239 percent to R10.1 billion or R31.51 per share versus R9.31 during the same period a year ago.
Total revenue increased by 77 percent to R34.5 billion, largely driven by a 57 percent increase in the average realised iron ore price to U.S.$108 tonne and the rand weakening by 16 percent on average against the US dollar.
Kumba chief executive Themba Mkhwanazi said the miner experienced a challenging first half which saw production volumes decreasing by 11 percent largely due to unscheduled plant maintenance in the first quarter, but made good progress in the second quarter.
"By integrating our sales and operational strategy, we achieved a 57 percent increase in our average realised FOB iron ore price," Mkhwanazi said.
"We are progressing at a pace towards our margin enhancement target of U.S.$10/tonne. Our operational efficiency increased to 67 pecent, which, together with our focus on cost optimisation, delivered savings of R460 million, underpinning our EBITDA margin of 58 percent and our break-even price of U.S.$32/tonne."
With a very strong opening cash position and attributable free cash flow of R12.7 billion, Kumba's board declared an interim cash dividend of R9.9 billion or R30.79 per share.
Mkhwanazi said in the second half of the year Kumba would aim to improve its safety performance, increase production volumes and deliver on its full year R700 million cost-savings target while continuing to achieve optimal market premia.