Embattled Kumba sees earnings fall 61%
Kumba Iron Ore Limited on Tuesday reported a 61 percent decline in headline earnings, from R6.5 billion to R2.5 billion, in the six months to June mainly as a result of lower realised iron ore export prices.
Total revenue of R20.5 billion was 23 percent lower than the R26.4 billion for the comparable period in 2014, with the favourable impact of a 12 percent weakening in the rand against the U.S. dollar only partially offsetting lower prices.
The Anglo American subsidiary, which announced last week that it was closing its 80-year-old Thabazimbi mine in Limpopo, said it had undertaken a number of key interventions to reduce its cash break-even price to $45/tonne from the $63/tonne in 2014.
Kumba said that while operating expenses had increased by four percent in the period under review, controllable costs per tonne were reduced by 16 percent. Headline earnings came in at R7.85 per share, down from R20.28. No dividend was declared.
The company said in a statement that prices were expected to remain under pressure and the cost savings initiatives would “add further complexity as the company navigates the remainder of this year”. However, the management of Kumba, was “confident that the measures we are taking will enable Kumba to remain a viable and resilient business through these challenging times for the iron ore industry”.
- ANA