Kumba flags at least 20% rise in profit

05 December 2016

South Africa’s Kumba Iron Ore flagged at least a 20% rise in full year profit on Friday, boosted by the metal’s rise in price and favourable currency swings.

Africa’s biggest iron ore miner said headline earnings would likely came in at a mininum R4.5 billion ($320 million), or 1 418 cents per share, in the year to end-December, compared with R3.7 billion, or 1 182 cents per share.

Headline EPS is the main profit measure in South Africa and strips out some one-off items.

Shares rose as much as 2% but were 0.4% lower at R163.88 by 1108 GMT.

Kumba said it would update its forecast a range in due course.

This is expected to show headline EPS jumping 87% to 2 210 cents, according to Thomson Reuters SmartEstimates, which puts more weight on more recent forecasts and those from historically accurate analysts.

Kumba, a unit of Anglo American , said the results were boosted by a weaker rand currency, which has slipped about 10% so far this year, and higher iron ore prices.

Unlike oil, gold and copper, whose benchmark pricing is set in London and New York, iron ore is one of the few commodities whose global pricing takes its cue from China.

Iron Ore futures prices are hovering near a two year high, surprising many in the market because iron ore supplies are ample, with stocks at China’s ports the biggest in more than two years.

Kumba is one of the assets its parent Anglo American has put on sale as part of a sweeping overhaul to cope with commodities rout. Anglo American owns 70% of Kumba, which earlier this year cut jobs and closed mines to cope with weak prices at the time.

Source – Mineweb