Anglo American subsidiary Kumba Iron Ore declared a bumper dividend for the year ended December 2024 despite a slump in profitability, saying it was “comfortable” it would meet its commitments including developing the technology project at its Sishen mine.
The group declared a R19.90 per share final cash dividend, bringing the total cash dividend for the full-year to R38.67 per share, representing a payout ratio of 100% of headline earnings.
The final dividend is above the group dividend policy which targets a payout range of between 50% to 75% of headline earnings.
Kumba's handsome dividend payout comes as Anglo American Platinum on Monday declared a cash dividend of R15.7bn or R59 per share to all shareholders, in addition to the final dividend of R3 per share, bringing its full-year 2024 dividend to R19.1bn or R71.75 per share and a R521m distribution to Thobo and community trusts.
CFO Bothwell Mazarura told journalists on Tuesday the group had topped up its dividend to a 100% payout given a strong balance sheet and a good year for cash generation.
“We looked at the base at 75% which is top end. We have had a good year from a cash generation perspective, good focus on our working capital and we ended the year on the same cash position as we did the previous year despite the lower profitability. On that basis we decided to top up that dividend to 100%. We are still left with a bit of cash on the balance sheet and we are comfortable we will meet our commitments, especially the ultra-high dense media separation (UHDMS) project we are executing.”
In August, the Kumba board approved a further R7.6bn investment in the UHDMS project that aims to improve the iron ore quality at Sishen, in addition to the R3.6bn previously approved in February 2021, bringing the total capital investment to R11.2bn.
Almost R2bn has been spent on the detailed engineering design, earthworks and technical review for the project.
CEO Mpumi Zikalala said Kumba had R9bn of investment left for the project which will be executed until 2029.
In terms of financials, Kumba's profits slumped to R19.2bn from R29.8bn in 2023. Revenue fell 21% to R68.5bn from R86.2bn a year earlier as prices fell and production was unchanged at 35.7Mt, while sales dropped 2% from the year before to 36.2Mt.
In 2024 the group revised its production guidance due to Transnet rail challenges.
Kumba is a member of the ore user's forum and worked closely with Transnet to prepare for the annual logistics maintenance shutdown in October 2024.
Zikalala said there was progress with 50km of train speed restrictions being lifted on the Ore Export Corridor, resulting in rail performance improving by 5% compared with the fourth quarter in 2023. However, despite progress, the group would like to run above the historic 40Mt level.
She said Kumba was working to participate in the reform process aimed at delivering a high-performance railway system in South Africa. This included discussions with the transport department, Transnet and the interim economic entity set up to build capacity for rail regulations.
“We know the challenges; there are technical challenges, we also know the constraints of Transnet's balance sheet. Kumba as a company does not have the skills to run rail. We believe the entire line could be concessioned to a player who will be able to focus on the line,” she said.
Business Times
Kumba declares handsome dividend despite profit slump
Anglo American subsidiary Kumba Iron Ore declared a bumper dividend for the year ended December 2024 despite a slump in profitability, saying it was “comfortable” it would meet its commitments including developing the technology project at its Sishen mine.
The group declared a R19.90 per share final cash dividend, bringing the total cash dividend for the full-year to R38.67 per share, representing a payout ratio of 100% of headline earnings.
The final dividend is above the group dividend policy which targets a payout range of between 50% to 75% of headline earnings.
Kumba's handsome dividend payout comes as Anglo American Platinum on Monday declared a cash dividend of R15.7bn or R59 per share to all shareholders, in addition to the final dividend of R3 per share, bringing its full-year 2024 dividend to R19.1bn or R71.75 per share and a R521m distribution to Thobo and community trusts.
CFO Bothwell Mazarura told journalists on Tuesday the group had topped up its dividend to a 100% payout given a strong balance sheet and a good year for cash generation.
“We looked at the base at 75% which is top end. We have had a good year from a cash generation perspective, good focus on our working capital and we ended the year on the same cash position as we did the previous year despite the lower profitability. On that basis we decided to top up that dividend to 100%. We are still left with a bit of cash on the balance sheet and we are comfortable we will meet our commitments, especially the ultra-high dense media separation (UHDMS) project we are executing.”
In August, the Kumba board approved a further R7.6bn investment in the UHDMS project that aims to improve the iron ore quality at Sishen, in addition to the R3.6bn previously approved in February 2021, bringing the total capital investment to R11.2bn.
Almost R2bn has been spent on the detailed engineering design, earthworks and technical review for the project.
CEO Mpumi Zikalala said Kumba had R9bn of investment left for the project which will be executed until 2029.
In terms of financials, Kumba's profits slumped to R19.2bn from R29.8bn in 2023. Revenue fell 21% to R68.5bn from R86.2bn a year earlier as prices fell and production was unchanged at 35.7Mt, while sales dropped 2% from the year before to 36.2Mt.
In 2024 the group revised its production guidance due to Transnet rail challenges.
Kumba is a member of the ore user's forum and worked closely with Transnet to prepare for the annual logistics maintenance shutdown in October 2024.
Zikalala said there was progress with 50km of train speed restrictions being lifted on the Ore Export Corridor, resulting in rail performance improving by 5% compared with the fourth quarter in 2023. However, despite progress, the group would like to run above the historic 40Mt level.
She said Kumba was working to participate in the reform process aimed at delivering a high-performance railway system in South Africa. This included discussions with the transport department, Transnet and the interim economic entity set up to build capacity for rail regulations.
“We know the challenges; there are technical challenges, we also know the constraints of Transnet's balance sheet. Kumba as a company does not have the skills to run rail. We believe the entire line could be concessioned to a player who will be able to focus on the line,” she said.
Business Times
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