(Alliance News) - Kumba Iron Ore Ltd on Tuesday said it has doubled its annual payout in 2020 following a surge in profit off the back of good iron export prices, which more than made up for a dip in production.
The iron ore miner's shares were 2.6% higher at ZAR685.26 each in Johannesburg on Tuesday.
Kumba is an arm of mining giant Anglo American PLC, focused on iron ore mining and production in South Africa.
Kumba's pretax profit for 2020 soared 41% to ZAR41.20 billion from ZAR29.25 billion in the year prior.
Revenue jumped 25% to ZAR80.10 billion from ZAR64.29 billion, mainly as a result of higher prices and a weaker exchange rate, partially offset by lower sales volumes, Kumba said.
Total tonnes mined decreased 14% to 256.3 million tonnes from 297.9 million tonnes.
"Kumba's mining performance was largely impacted by Covid-19 and weather-related headwinds, and to a lesser extent, equipment reliability and availability," Kumba said.
"A number of interventions have been implemented to mitigate these impacts. We have enhanced our high rainfall readiness and associated recovery plans to manage through such weather impacts going forward. Our focus on improving equipment uptime through the implementation of defect elimination and work management programmes, as well as artisan and supervisor skills development programmes, is also delivering results and we are seeing improvements in equipment reliability across the fleet," the miner added.
Production fell 13% to 37.0 million tonnes from 42.4 million tonnes. Sales dipped 5.9% to 39.7 million tonnes from 42.2 million tonnes. The average realised iron ore export prices increased 18% to USD115 per tonnes, up from USD97 per tonne.
Kumba declared a final dividend of ZAR41.30 per share, increasing almost threefold from ZAR15.73. This brought the annual payout to ZAR60.90 per share, doubling from the prior year's ZAR30.24 per share.
Production guidance is set for between 40 million tonnes and 41 million tonnes, with sales following suit, also set to be between 40 million tonnes and 41 million tonnes.
Kumba parent Anglo American, a member of the FTSE 100 index in London and Top 40 index in Johannesburg, is scheduled to release its financial results for 2020 on Thursday.
According to Russ Mould of AJ Bell, iron ore is expected to be one of the company's key earners for the year.
Anglo American shares were up 1.2% at ZAR588.61 each in Johannesburg on Monday, and were up 1.5% at 2,849.00 pence each in London.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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