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Kumba Iron Ore Announces Annual Results for 2019

Mining News - Published on Thu, 20 Feb 2020

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Kumba CEO Themba Mkhwanazi said “Kumba’s strategy has helped deliver exceptional earnings growth, as we continue to increase the resilience of the business. Against challenging operational conditions, we marked another year of strong financial performance with EBITDA up by 62% to R33.4 billion. Our financial performance reflects the benefits of higher iron ore prices, improved efficiencies and further cost savings ahead of our target, which have cushioned the impact of the operational challenges experienced during the period. These results were also achieved through a relentless focus on safety as we maintained our fatality free track record since May 2016. Our commitment to responsible production, focused on unlocking value from our world-class assets, has in turn allowed us to help build thriving communities and improve people’s lives.

“Kumba’s EBITDA margin increased to 52% and cash flow from operations is up by 79% to R34.7 billion. Kumba’s strong performance and robust balance sheet, resulted in the Board declaring a final cash dividend of R15.99 per share. Combined with the interim dividend of R30.79 per share, this represents a total payout ratio of 92% of headline earnings per share for 2019, in excess of our 50% to 75% dividend payout policy. In total we have created value of R19.6 billion for shareholders this year.

“Since embarking on our margin enhancement strategy, Kumba’s return on capital employed has improved from 49% in 2018 to 83% in 2019, reflecting favourable markets and the continued success of our value over volume strategy. We are focused on optimising the value of our assets, generating strong cash flows and further improving returns. Kumba has transformed into a more capital efficient and resilient business, providing greater stability for our employees, contractors and the communities around us, as well as delivering sustainable returns to our shareholders.”

Delivering sustainable value
Attributable free cash flow of R17.1 billion, up over 100%
ROCE of 83%, up from 49%
Final dividend of R15.99 per share, total dividend of R46.78 per share

Improving People's Lives
Fatality free since May 2016
Lost-time injuries reduced by 19% to 17
Zero level 3 to 5 environmental incidents
Created R32 billion of value for employees, the fiscus, BEE suppliers and local communities

Continued focus on Margin Enhancement
Average realised FOB export price of US$97/tonne, up by 35%
Operating efficiency up from 65% to 68% of benchmark
Cost savings of R920 million, ahead of R700 million target
EBITDA margin improved from 45% to 52%

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Posted By : Rabi Wangkhem on Thu, 20 Feb 2020
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