South African Equities Research: Kumba Iron ore

KIO:SJ 

Kumba delivered a solid set of final results for the full year ended 31 December 2020 on the 23rd of February 2021, which reflected a robust recovery in Chinese steel production following disruptions to the global economy due to the COVID-19 pandemic.
• Revenue increased by 25%, benefitting from higher realised prices,
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) increased to 57%,
• Free cash flow generation increased by 21% to R20.7 billion,
• Achieved return on capital employed (ROCE) of 109%,
• Headline earnings per share (HEPS) up almost 40% to 7 107 cents,
• A final cash dividend of 4 130 cents per share was declared (total dividend per share (DPS) for the year of 6 090 cents)
Revenue and earnings before interest, tax, depreciation, and amortisation (EBITDA) for FY 2020 were substantially higher at R80.1 billion and 57% respectively than the R64-billion and the 52% for the comparable period in FY2019, mainly as a result of a 14% decline in dollar/rand exchange rate, 40% higher iron ore prices and cost savings of R1.3 billion. Sales were partially offset by a decline in sales volumes to 39.7 million tonnes from 42 million tonnes in the prior comparable period due to COVID-19 related disruptions and bad weather conditions, however, average realised iron ore export prices increased 18% to USD115 per tonnes, up from USD97 per tonne.
Pretax profit for FY2020 rose 41% to ZAR41.20 billion from ZAR29.25 billion in the prior year.
Production fell 13% to 37.0 million tonnes from 42.4 million tonnes, reflecting the impact of operational and logistical COVID-19 related disruptions to their mines in Sishen and Kolomela in the Northern Cape and their Saldanha Port. To read more click here