Kumba, one of the few darlings of the JSE over the past five years, has reported a bumper set of numbers for its financial year-end to 31 December 2020. The group increased earnings by 40% on the back of higher iron ore prices and a weaker domestic currency. Kumba’s results come a day after its parent company, Anglo American, reported numbers. Commodities are notoriously hard to predict, with Iron Ore being no exception. Kumba’s share price crept below R30 a share in January 2016, with the share price having climbed a staggering 2,200% since then in a five-year period. Since the advent of the coronavirus pandemic, China’s infrastructure drive has led the demand for Iron ore, pushing the commodity to all-time highs. Possibly the most astonishing part of Kumba’s results is that it paid shareholders a total case dividend of R60, almost twice the share price of the company five years ago. – Justin Rowe-Roberts
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Kumba Iron Ore SENS statement:
Provisional audited results for the year ended 31 December 2020 and cash dividend declaration
Key features
Strong earnings growth of 40%
‐ Attributable free cash flow of R20.7bn up by 21%
‐ ROCE of 109% up from 83%
‐ Final cash dividend of R41.30 per share, total cash dividend of R60.90 per share
Creating enduring value
‐ Four years and seven months of fatality‐free production
‐ No occupational diseases
‐ Over five years without any level 3‐5 environmental incidents
‐ R60bn of shared value, including R93m of Covid‐19 community support Resilient and sustainable business ‐ Average realised FOB export price of $115/tonne
‐ Cost savings of R1.3bn, keeping C1 costs at $31/t
‐ Protected EBITDA margin of 57%, up from 52%
‐ Sishen life extension potential to 2039 with R3.6bn UHDMS project approved in February 2021
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Kumba delivers a record EBITDA of R45.8bn
Themba Mkhwanazi, Chief Executive of Kumba, said: “Kumba delivered EBITDA growth of 37% while keeping our commitment on health and safety and supporting our communities as we navigated exceptional conditions.
We capitalised on our product quality, a higher average realised price of $115/tonne and costs savings of R1.3bn to deliver a record EBITDA of R45.8bn and R20.7bn of free cash flow, supporting the Board’s decision to declare a final cash dividend of R41.30 per share.
Since 2018, Kumba’s EBITDA margin has improved from 45% to 57% and we have converted 30% of additional reserves. Sishen has life extension potential to 2039 with the approval of the R3.6bn UHDMS project in February 2021.
Kumba’s consistent and focused delivery of its Tswelelopele strategy, strong balance sheet and capital discipline enables us to continue creating enduring value for all of our stakeholders.”
