Research archive for KIO

Another mining company to report full year numbers is Kumba Iron Ore, ahead of parents company Anglo American's results on Friday. Kumba is of course more than two thirds owned by Anglo American. You can read all of the highlights, in what was a very tough second half, here: Results highlights - 2014. It is important to note that the average price for Iron Ore over the period was 97 Dollars a ton, currently we are a little above 61 Dollars a ton. The company cites weaker demand from their main customer, China and more supply. Classic part of the mining cycle is when more supply comes on stream as a result of the higher prices. In the market overview segment, Kumba says: "Global seaborne iron ore supply rose 11% in 2014 led by a 24% increase in Australian exports as well as a 4% increase in exports from Brazil and 2% from South Africa."

Kumba Iron Ore stuck out a trading update on Friday afternoon, of course with sliding iron ore prices their earnings were always going to be much lower than the period before. The Rand of course has been somewhat of a cushion, for these numbers of course. For the first half, headline earnings were 16 percent lower to 6.5 billion Rand, for the full year they are anticipated to be 10.61 to 11.41 billion Rand, in other words 4.1 to 4.9 billion Rand, lower than the first half by quite some margin. Results for the full year are anticipated to be around the 10th of February, there was some brief respite in terms of the falling iron ore price, the price has trended lower (like most commodity prices), stabilising somewhat after five straight months of downward direction. We are more or less at the same commodity price on iron ore today than the middle of 2009. Remembering that the iron ore price was flat for nearly 30 years, from the early 1980's all the way through to 2003. It was then that something changed, the Chinese demand exploded. Governments (who then taxed more) did nothing, it was all the demand from a new customer, where their government changed everything.

Kumba Iron Ore reported profits for the half year to end June. This is of course a pure commodities producer, a single commodity producer. Their only product is iron ore, which for those of you who want to know what it is used for, steelmaking. So for infrastructure development, this is one of the bulk commodities that you need a lot of. Anglo American are the main shareholder here, they own 69.71 percent of this business, the IDC owns 12.9 percent and the PIC owns 2.7 percent. That leaves very little for minority shareholders, less than 15 percent in total. Indirectly, as it is a very profitable business, it is very important to the many Anglo American shareholders.

Yesterday Kumba Iron Ore released their full year results. The highlights were that revenue is up 20%, headline earnings are up 24% to 4808c per share and the full year dividend is up 26.3% to 4004c per share.

Kumba Iron Ore have reported numbers for the full year to end December 2013. Production was 8 percent lighter than than the prior period, Q4 was much better than Q3 though. Export sales were essentially flat. But the kicker for main shareholder, Anglo American, is that the total dividend in Rand terms is 26 percent higher for the full year at a touch over 40 Rands. A second half dividend of 19.94 ZAR a share. The reason why I make that Rand increase observation is that essentially the Rand is about that much weaker in Dollar terms over the last year, and whilst the company has their product priced in Dollars, they earn Rands. Byron will take a more detailed look at these results tomorrow, I guess that many would be saying that this is as good as it gets.

This morning we received 6 month results from Kumba Iron ore which were flat. That certainly does not paint the whole picture, there are lots of moving parts here. Headline earnings came in at R7.7bn for the period. This was the same as last year. However the drivers were different. The rand was on average 16% weaker which partially offset a 7% weaker average iron ore price. Overall revenue was up 4% even though sales volumes decreased 5% to 22.1 million tonnes (Mt).

Kumba Iron Ore released results this morning, for the full year to end December. Normally Byron would have jumped all over this one, but I said that I wanted to cover them and work in resource nationalism, whatever that means. Because I had heard a radio interview with John Robbie and Prof. Ben Turok this morning, and in fact the first lines of the results nail what I am talking about. Record production of 43.1 million tons, that is excellent. Wait for it, export sales volumes increased to 39.7 million tons. The difference between the two is obviously what we use here, a total of 3.4 million tons. Wow. This is a 27 percent reduction in domestic sales, perhaps another sign that the local steel industry is in crisis mode. So, more than 90 percent of what is produced here is sold elsewhere. Why? Because someone else needs it more than we do.

On Friday we received production numbers from Kumba Iron Ore. Remember a few weeks ago there was a trading update which suggested that earnings per share were expected to come in between R36.30 and R38.80. This was down significantly from the previous reporting period which came in at R53.13. So let's look at these production numbers.

On Friday we received production numbers from Kumba Iron Ore. Remember a few weeks ago there was a trading update which suggested that earnings per share were expected to come in between R36.30 and R38.80. This was down significantly from the previous reporting period which came in at R53.13. So let's look at these production numbers.

One that we missed yesterday was the Kumba update. Well we didn't miss it ourselves, we just didn't have time to write about it. Fortunately, we are long term investors, so jumping on news as it comes out is not our (therefore your) priority. So here it is, a day late.

Another good set of numbers from the Iron ore miner, even though profits were down due to lower Iron ore prices. Here are the numbers from the release.

A trading update from Kumba Iron Ore on Friday looked weak, but once again this is as a result of the same factors that we were referring to above, a slowing European economy which is resulting in a global slowdown. As Byron often says, if someone does not need a new washing machine in Spain or Italy, and the goods are manufactured in China, well, that means less business for the Chinese. And that means less demand for the raw products too. ALTHOUGH, the internal consumption story in China is one that still continues to impress the pundits, or so I am led to believe. China still has a relatively unbalanced economy. But back to this main story, Kumba Iron Ore expect earnings for the first six months of the year to clock 7.1 to 7.5 billion Rands, which on a per share basis is between 22.10 ZAR to 23.40 ZAR. Which on balance sounds good, and the share price is acceptable at 559 ZAR a share, bearing in mind that the distributions have been amazing. The payout ratio in recent years has been around 80 percent of earnings.

Yesterday we had a production and sales report for the quarter ended 31 December 2011 from Kumba Iron Ore. Total production increased by 4% thanks to the Kolomela mine being commissioned five months ahead of schedule with shipments starting in December 2011. There was actually a decline in production from the Sishen mine due to feedstock constraints in the separation process.

The second update was from Kumba. The company is expected to make between R51.40 and R55.80 a share. The stock trades at R528 and what I would call a cheap valuation of less than 10. Especially for a company that is yielding a dividend of around 8%. The market was not reactive to this news because the numbers actually reflect a slowdown in the second half. A more in depth analysis will be done when the results are out but I want to leave you with this article written by Sake 24. It's an absolutely fascinating story about the Kumba bonuses and it's affect on the economies of the small surrounding towns. It paints a good picture of why the Australian economy has done so well to benefit from the commodity boom and how strong growth can alleviate poverty in a country like ours via the multiplier effect.

How did Kumba Iron Ore react after those sparkling results? Well, I was actually asked that question and I must be honest, it was actually difficult to tell whether or not the answer was one that was "spot on". I said for starters the actual results were slightly better than the trading update a couple of weeks ago, but the market had already reacted positively to the trading update. Second, the HSBC China PMI number released earlier in the day, prior to our session getting underway did very little by way of scoring for commodity prices. So those two things negative. About the only thing I guess you could get anxious on would be the freight rates that Kumba currently has. After all, it is not like Kumba CAN build their own line or port. Like in err... Brazil. Or even Australia. Just saying.